Balance Corporation borrowed P10,000,000 at 12% to finance in part the construction of a new office building on January 1, 2021 and in part for general purposes. The loan is to be repaid commencing the month following completion of the building.
Balance Corporation borrowed P10,000,000 at 12% to finance in part the construction of a new office building on January 1, 2021 and in part for general purposes. The loan is to be repaid commencing the month following completion of the building.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments
Section: Chapter Questions
Problem 18E
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Balance Corporation borrowed P10,000,000 at 12% to finance in part the
construction of a new office building on January 1, 2021 and in part for general
purposes. The loan is to be repaid commencing the month following completion of the
building.
Expenditures for the completed structure totaled P8,000,000 during the year ended
December 31, 2021. These expenditures were incurred evenly throughout the year.
The entity earned interest of P80,000 for the year on the unexpended portion of the
loan.
What amount of interest is capitalized on December 31, 2021?
What is the interest expense for 2021?
O 720,000
O 1,000,000
O 1.200.000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F82a4b2d7-209d-410b-996d-e76d91dffcbf%2Fd10e5935-f308-4275-afb5-bfdefdf0581c%2Flko51z_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Contact Support for textbook, writing, or
account heln
Balance Corporation borrowed P10,000,000 at 12% to finance in part the
construction of a new office building on January 1, 2021 and in part for general
purposes. The loan is to be repaid commencing the month following completion of the
building.
Expenditures for the completed structure totaled P8,000,000 during the year ended
December 31, 2021. These expenditures were incurred evenly throughout the year.
The entity earned interest of P80,000 for the year on the unexpended portion of the
loan.
What amount of interest is capitalized on December 31, 2021?
What is the interest expense for 2021?
O 720,000
O 1,000,000
O 1.200.000
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