During 2021, Happy Company constructed asset costing P10,000,000. The weighted average expenditures totaled P6,000,000. To help pay for the construction, P4,400,000 was borrowed at 10% on January 1, 2021. Funds not needed for construction were temporarily invested in short-term securities yielding P90,000 in interest revenue. Other than the construction funds borrowed, the only other debt outstanding during the year was P5,000,000, 10-year, 9% note payable dated January 1, 2020. What amount of interest should be capitalized during 2021?
During 2021, Happy Company constructed asset costing P10,000,000. The weighted average expenditures totaled P6,000,000. To help pay for the construction, P4,400,000 was borrowed at 10% on January 1, 2021. Funds not needed for construction were temporarily invested in short-term securities yielding P90,000 in interest revenue. Other than the construction funds borrowed, the only other debt outstanding during the year was P5,000,000, 10-year, 9% note payable dated January 1, 2020. What amount of interest should be capitalized during 2021?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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During 2021, Happy Company constructed asset costing P10,000,000. The weighted average expenditures totaled P6,000,000.
To help pay for the construction, P4,400,000 was borrowed at 10% on January 1, 2021.
Funds not needed for construction were temporarily invested in short-term securities yielding P90,000 in interest revenue.
Other than the construction funds borrowed, the only other debt outstanding during the year was P5,000,000, 10-year, 9% note payable dated January 1, 2020.
What amount of interest should be capitalized during 2021?
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