The Danica Company self constructed an asset for its own use. Construction started on January 1, 2021 and the asset was completed on October 31, 2021. Costs incurred during the period of construction were as follows: January 1-P400,000 April 1-P500,000 August 1-P480,000 October 1-P180,000 At the beginning of the year, the company obtained a two-year, 18% loan of P500,000, specifically to finance the asset construction. In addition to the specific borrowing, prior to the construction, Danica Company had a general borrowing amounting to P600,000 with interest of 15%
The Danica Company self constructed an asset for its own use. Construction started on January 1, 2021 and the asset was completed on October 31, 2021. Costs incurred during the period of construction were as follows: January 1-P400,000 April 1-P500,000 August 1-P480,000 October 1-P180,000 At the beginning of the year, the company obtained a two-year, 18% loan of P500,000, specifically to finance the asset construction. In addition to the specific borrowing, prior to the construction, Danica Company had a general borrowing amounting to P600,000 with interest of 15%
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The Danica Company self constructed an asset for its own use. Construction started on January 1, 2021 and the asset was completed on October 31, 2021. Costs incurred during the period of construction were as follows:
January 1-P400,000
April 1-P500,000
August 1-P480,000
October 1-P180,000
At the beginning of the year, the company obtained a two-year, 18% loan of P500,000, specifically to finance the asset construction.
In addition to the specific borrowing, prior to the construction, Danica Company had a general borrowing amounting to P600,000 with interest of 15% and a five-year term that was used in part in the self construction.
What is the total cost of the self constructed asset?
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