On January 1, 2018, the Divine Company took out a 12% P10 million loan to finance the construction of a building. The key dates are as follows: January 1 – Loan interest relating to the project starts to be incurred February 1 – Technical site planning commences March 1 – Expenditures on the project start to be incurred April 1– Construction Work Commences November 1 – Substantially all of the activities necessary to prepare the asset for its intended use are complete December 1 – Building brought into use What amount of interest should divine capitalize for the current year? a. 1,000,000 b. 900,000 c. 800,000
On January 1, 2018, the Divine Company took out a 12% P10 million loan to finance the construction of a building. The key dates are as follows: January 1 – Loan interest relating to the project starts to be incurred February 1 – Technical site planning commences March 1 – Expenditures on the project start to be incurred April 1– Construction Work Commences November 1 – Substantially all of the activities necessary to prepare the asset for its intended use are complete December 1 – Building brought into use What amount of interest should divine capitalize for the current year? a. 1,000,000 b. 900,000 c. 800,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2018, the Divine Company took out a 12% P10 million loan to finance the construction of a building. The key dates are as follows:
January 1 – Loan interest relating to the project starts to be incurred
February 1 – Technical site planning commences
March 1 – Expenditures on the project start to be incurred
April 1– Construction Work Commences
November 1 – Substantially all of the activities necessary to prepare the asset for its intended use are complete
December 1 – Building brought into use
What amount of interest should divine capitalize for the current year?
a. 1,000,000
b. 900,000
c. 800,000
d. 700,000
What is the solution for option C?
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