Problem
Pina Ltd. is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were HK$1,440,000 on March 1, HK$960,000 on June 1, and HK$2,400,000 on December 31.
Pina Ltd. had outstanding all year a 8%, 5-year, HK$3,200,000 note payable and an 9%, 4-year, HK$2,800,000 note payable. Determine the amount of borrowing cost that Pina Ltd. would capitalize. Use the capitalization rate used for borrowing cost capitalization purposes.