Requirements:1. How much is the capitalizable borrowing cost?2. How much is the interest income for the year?3. How much is the interest expense for the year?4. What is the total initial cost of the building?5. What is the carrying value of the building as of December 31, 2020?

PROBLEM 4 Your audit client, See Ben Eleven Inc., decided to construct a building on 2020. The construction started on March 1, 2020, and the building was completed by the end of November of 2020. The entity was able to occupy the said structure by the start of December of the same year. In anticipation of the construction, the entity obtained a 3-year loan from PN Bank on January 4, 2020 exclusively for the construction of the new building. The principal amount of the loan is P20,000,000, with stated interest of 10% payable every December 31. See Ben Eleven made the following payments in the construction of the building: Date Amount March 1, 2020 4,000,000 April 30, 2020 1,600,000 July 31, 2020 800,000 September 1, 2020 1 1,000,000 October 1, 2020 1,900,000 November 30, 2020 500,000 During the year, your audit client reinvested the unused proceeds every start of the month for a 0.75% monthly interest, starting January. The estimated useful life of the building is 20 years with no residual value. The entity used the straight-line method of depreciating the building. Requirements