On January 1, 2018, Imp Company borrowed P6 million at an annual interest rate of 10% to finance the costs of building an electricity generating plant. Construction commenced on January 1, 2018 and cost P6 million. Not all the cash borrowed was used immediately, so interest income of P80,000 was generated by temporarily investing some of the borrowed funds prior to use. The project was completed on November 30, 2018. What is the carrying amount of the plant at November 30, 2018? a. 6,000,000 b. 6,470,000 c. 6,520,000 d. 6,420,000 What is the solution for option B?
On January 1, 2018, Imp Company borrowed P6 million at an annual interest rate of 10% to finance the costs of building an electricity generating plant. Construction commenced on January 1, 2018 and cost P6 million. Not all the cash borrowed was used immediately, so interest income of P80,000 was generated by temporarily investing some of the borrowed funds prior to use. The project was completed on November 30, 2018. What is the carrying amount of the plant at November 30, 2018? a. 6,000,000 b. 6,470,000 c. 6,520,000 d. 6,420,000 What is the solution for option B?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2018, Imp Company borrowed P6 million at an annual interest rate of 10% to finance the costs of building an electricity generating plant. Construction commenced on January 1, 2018 and cost P6 million. Not all the cash borrowed was used immediately, so interest income of P80,000 was generated by temporarily investing some of the borrowed funds prior to use. The project was completed on November 30, 2018. What is the carrying amount of the plant at November 30, 2018?
a. 6,000,000
b. 6,470,000
c. 6,520,000
d. 6,420,000
What is the solution for option B?
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