Solution-Calculate the amount of borrowing costs to be

Calculate the amount of borrowing costs to be capitalized

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Reference no: EM132741946

Question: Sneezy Company constructs a new head office building commencing on September 1, 2016 and was completed at December 31, 2016. Directly attributable expenditure on this asset is P400,000 in September 2016 and P350,000 at the beginning of each month from October to December 2016. Sneezy Company has not taken out any specific borrowings to finance the construction of the asset, but has incurred finance costs on its general borrowings during the construction period.

During the year Sneezy Company had 9% debentures in issue with a face value of P3,000,000 and an overdraft of 1,200,000, which increased to 1,500,000 in December 2016 on which interest was paid at 12%.

The amount of borrowing costs to be capitalized in relation to the building construction for 2016 is?

Reference no: EM132741946

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Calculate the amount of borrowing costs to be capitalized

Reference no: EM132741946

Reference no: EM132741946

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