question archive Audit of Fixed Assets The building was completed on December 31, 2021

Audit of Fixed Assets The building was completed on December 31, 2021

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Audit of Fixed Assets The building was completed on December 31, 2021. On January 1, 2021, the company obtained a loan for P5,000,000 at an interest rate of 10%, specifically for the construction of the building. Disbursement of the loan were made at the beginning of each quarter in equal amounts. The remaining balance before disbursement earned interest of 3% per annum. Minos Corp. also had the following other loans outstanding in 2021 which were borrowed for general purposes. The proceeds of these loans were used in partly for the construction of the building. A 10%, 2 year note for P1.600,000 and 12%, 5 year note for P2,000,000. Determine the following as a result of your audit: 1. How much is the capitalizable interest in 2021? 2. The weighted average rate (%) to be used for general borrowing is? 3. How much is the interest expense in 2020 related to constructed asset? 4. How much is the total cost of the building?

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