4. A bridge that was constructed at a cost of P75,000,000 is expected to last 30 years, at the end of which time its renewal cost will be P40,000,000. Annual repairs and maintenance are P3,000,000. What is the capitalized cost of the bridge at an interest of 6%? Capitalized Cost = First cost + Q + x Q = PW(P/A, i, k) X = (1+ i)* – 1

4. A bridge that was constructed at a cost of P75,000,000 is expected to last 30 years, at the end of which time its renewal cost will be P40,000,000. Annual repairs and maintenance are P3,000,000. What is the capitalized cost of the bridge at an interest of 6%? Capitalized Cost = First cost + Q + x Q = PW(P/A, i, k) X = (1+ i)* – 1

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

4. A bridge that was constructed at a cost of P75,000,000 is expected to last 30 years, at
the end of which time its renewal cost will be P40,000,000. Annual repairs and
maintenance are P3,000,000. What is the capitalized cost of the bridge at an interest of
6%?
Capitalized Cost = First cost + Q + X
Q = PW (P/A, i, k)
X =
(1+ i)k – 1

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