During 2017, Reticulated Company constructed a new manufacturing facility at a cost of P30,000,000. The expenditures for this building, which was finished late in 2017, were incurred evenly during the year. The entity had the following loans outstanding at December 31, 2017. 10% note to finance specifically construction of the manufacturing facility, dated January 1, 2017, P10,000,000. Unpaid as of December 31, 2017. Investments were made on the proceeds from this loan and income of P100,000 was realized in 2017. 12%, 20-years bonds payable issued at face value on April 30, 2016, P30,000,000. 8%, 5-years payable, dated March 1, 2016, P10,000,000. What amount of interest is capitalized as cost of the new building? A . 1,550,000 B. 1,450,000 C. 1,400,000 D. 1,500,000
During 2017, Reticulated Company constructed a new manufacturing facility at a cost of P30,000,000. The
expenditures for this building, which was finished late in 2017, were incurred evenly during the year. The
entity had the following loans outstanding at December 31, 2017.
10% note to finance specifically construction of the manufacturing facility, dated January 1, 2017,
P10,000,000. Unpaid as of December 31, 2017. Investments were made on the proceeds from this loan
and income of P100,000 was realized in 2017. 12%, 20-years bonds payable issued at face value on April 30, 2016, P30,000,000.
8%, 5-years payable, dated March 1, 2016, P10,000,000.
What amount of interest is capitalized as cost of the new building?
A
.
1,550,000 B. 1,450,000 C. 1,400,000 D. 1,500,000
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