On January 1, 20x1, Entity A started the construction of a qualifying asset. The qualifying assetis financed through general borrowings. The average expenditures during the year amounted to₱9,500,000. The capitalization rate is 11%. The actual borrowing costs incurred during the periodwere ₱1,990,000. How much are the borrowing costs eligible for capitalization?

On January 1, 20x1, Entity A started the construction of a qualifying asset. The qualifying assetis financed through general borrowings. The average expenditures during the year amounted to₱9,500,000. The capitalization rate is 11%. The actual borrowing costs incurred during the periodwere ₱1,990,000. How much are the borrowing costs eligible for capitalization?

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter8: Depreciation And Sale Of Business Property

Section: Chapter Questions

Problem 11MCQ

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Use the following information for the next two questions: On January 1, 20x1, Entity A had the following general borrowings. A part of the proceeds was used to finance the construction of a qualifying asset: Principal 12% bank loan (1.5 years) ₱ 1,000,000 10% bank loan (3-year) 8,000,000 Expenditures made on the qualifying asset were as follows: Jan. 1 ₱ 5,000,000 March 1 4,000,000 August 31 3,000,000 December 1 2,000,000 Construction was completed on December 31, 20x1. How much borrowing costs are capitalized to the cost of the constructed qualifying asset? 1,045,000 c. 1,026,667 971,111 d. 920,000 How much is the cost of the qualifying asset on initial recognition? 13,010,000 c. 14,920,000 15,045,000 d. 14,971,111
On January 1, 20x1, Entity A had the following general borrowings. A part of the proceeds was used to finance the construction of a qualifying asset: Principal 12% bank loan (1.5 years) ₱ 1,000,000 10% bank loan (3-year) 8,000,000 Expenditures made on the qualifying asset were as follows: Jan. 1 ₱ 5,000,000 March 1 4,000,000 August 31 3,000,000 December 1 2,000,000 Construction was completed on December 31, 20x1. How much borrowing costs are capitalized to the cost of the constructed qualifying asset? 1,045,000 1,026,667 971,111 920,000 How much is the cost of the qualifying asset on initial recognition? 13,010,000 14,920,000…
On January 1, 20x1, Entity A obtained a 12%, ₱6,000,000 loan, specifically to finance the construction of a building. The proceeds of the loan were temporarily invested and earned interest income of ₱180,000. The construction was completed on December 31, 20x1. How much borrowing costs are capitalized to the cost of the constructed building? 540,000 3. 720,000 480,000 4. 0
Use the following information for the next two questions: On January 1, 20x1, Entity A had the following general borrowings. A part of the proceeds was used to finance the construction of a qualifying asset: Principal P1,000,000 12% bank loan (1.5 years) 10% bank loan (3-year) P8,000,000 Expenditures made on the qualifying asset were as follows: Jan.1 P 5,000,000 4,000,000 March 1 August 31 December 1 3,000,000 2,000,000 Construction was completed on December 31, 20x1. .How much borrowing costs are capitalized to the cost of the constructed qualifying asset?
What amount of borrowing costs should be capitalized as cost of the asset? *a. P 360,000b. P 310,000c. P 328,750d. P 327,500
On January 1, 20x1, Entity A obtained a 12% ₱6,000,000 loan, specifically to finance the construction of a building. The proceeds of the loan were temporarily invested and earned interest income ₱180,000. The construction was completed on December 31, 20x1. How much borrowing costs are capitalized to the cost of the constructed building? * A. 720,000 B. 0 C. 540,000 D. 480,000
On January 1, 20x1, Entity A obtained a 12%, ₱6,000,000 loan, specifically to finance the construction of a building. The proceeds of the loan were temporarily invested and earned interest income of ₱180,000. The construction was completed on December 31, 20x1 for a totalconstruction cost of ₱7,000,000. How much is the historical cost of the newly constructed building? a. 7,540,000 b. 7,480,000 c. 7,000,000 d. 6,460,000
On January 1, 20x1, Entity A obtained a 10%, ₱5,000,000 loan, specifically to finance the construction of a building. The proceeds of the loan were temporarily invested and earned interest income of ₱180,000. The construction was completed on December 31, 20x1 for total construction costs of ₱7,000,000. How much is the cost of the building on initial recognition? * A. 7,320,000 B. 7,500,000 C. 6,680,000 D. 7,000,000
On January 1, 20x1, Entity A obtained a 12%, ₱6,000,000 loan, specifically to finance the construction of a building. The proceeds of the loan were temporarily invested and earned interest income of ₱180,000. The construction was completed on December 31, 20x1 for a total construction cost of ₱7,000,000. How much is the historical cost of the newly constructed building? 7,540,000 3. 7,000,000 7,480,000 4. 6,460,000
Use the following information for the next two questions: On January 1, 20x1, Entity A had the following general borrowings. A part of the proceeds was used to finance the construction of a qualifying asset: 12% bank loan (1.5 years) 10% bank loan (3-year) Principal ℗ 1,000,000 8,000,000 Expenditures made on the qualifying asset were as follows: Jan. 1 P 5,000,000 4,000,000 March 1 August 31 December 1 3,000,000 2,000,000 Construction was completed on December 31, 20x1. 20. How much borrowing costs are capitalized to the cost of the constructed qualifying asset? a. 1,045,000 c. 1,026,667 b. 971,111 d. 920,000 21. How much is the cost of the qualifying asset on initial recognition? a. 13,010,000 c. 14,920,000 b. 15,045,000 d. 14,971,111
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