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Question - On 1 January 2013 The Pyongyang Company took out a loan of P26 million in order to finance the renovation of a building. The renovation work started on the same date. The loan carried interest at 10%. Work on the building was substantially complete on 31 October 2013. The loan was repaid on 31 December 2013 and P180,000 investment income was earned in the period to 31 October on those parts of the loan not yet used for the renovation. According to PAS23 Borrowing costs, what is the total amount of borrowing costs to be included in the cost of the building?
a. P2,600,000
b. P2,166,667
c. P2,420,000
d. P1,986,667
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