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Find what is the capitalizable borrowing cost

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Reference no: EM132697765

On January 1, 2020, an entity borrowed P6,000,000 at an annual interest rate of 10% to finance specifically the cost of building an electric generating plant. Construction commenced on January 1, 2020 with a cost P6,000,000. Not all the cash borrowed was used immediately, so interest income of P80,000 was generated by temporarily investing some of the borrowed funds prior to use. The project was completed on December 1, 2020.

Problem 1: What is the capitalizable borrowing cost?

Group of answer choices

Option 1: 600,000

Option 2: 470,000

Option 3: 550,000

Option 4: 520,000

Reference no: EM132697765

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