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How much is borrowing to be capitalized by solomon company

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Question - Solomon Company constructed its own office building. The company had a P1,000,000 two-year 12% loan specifically obtained to finance the asset construction. The construction began on January 1, 2021 and the building was completed on December 31, 2021. Expenditures on the building were made as follows:

January 1, 2021 - P1,600,000

April 30, 2021 - P600,000

November 11, 2021 - P1,200,000

Solomon has the following outstanding general borrowings: BPI at 10% for P 1,500,000 and BDO at 12% for P 2,500,000.

Required -

1. How much is the borrowing to be capitalized by Solomon Company?

2. How much is the total finance cost for the year 2021?

Reference no: EM133078286

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