Prob dapted) During 2020, Elijah Company constructed a new building at cost of P30,000,000. The expenditures for the building which was finished late in 2020 were incurred evenly during the year. The entity had the following loans outstanding on December 31, 2020: 10% note to finance specifically the construction, dated January 1, 2020, P10,000,000. The note is unpaid on December 31, 2020. Investments were made on the proceeds from the loan and income of P100,000 was realized in 2020. 12% 10-year bonds issued at face amount on April 30, 2019, P30,000,000. 8% 5-year note payable, dated March 1, 2019, P10,000,000. 1. What is the capitalizable borrowing cost? a. 1,550,000 b. 1,450,000 c. 1,400,000 d. 1,500,000 2. What is the interest expense for 2020? a. 4,400,000 b. 2,850,000 c. 3,850,000 2 950 000

Prob dapted) During 2020, Elijah Company constructed a new building at cost of P30,000,000. The expenditures for the building which was finished late in 2020 were incurred evenly during the year. The entity had the following loans outstanding on December 31, 2020: 10% note to finance specifically the construction, dated January 1, 2020, P10,000,000. The note is unpaid on December 31, 2020. Investments were made on the proceeds from the loan and income of P100,000 was realized in 2020. 12% 10-year bonds issued at face amount on April 30, 2019, P30,000,000. 8% 5-year note payable, dated March 1, 2019, P10,000,000. 1. What is the capitalizable borrowing cost? a. 1,550,000 b. 1,450,000 c. 1,400,000 d. 1,500,000 2. What is the interest expense for 2020? a. 4,400,000 b. 2,850,000 c. 3,850,000 2 950 000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

On 4/1/22, Little Inc. borrowed funds on a 9%, one-year note to finance the construction of a new building to be used for its own purposes. Construction on the project began on 5/1/22 and was completed on 9/1/22. Rounded to the nearest whole month, how many total months in 2022 should interest be capitalized under the interest capitalization rules? 0 months 4 months 5 months 8 months 9 months 12 months
Bonita Industries is constructing a building. Construction began on January 1 and was completed on December 31. Expenditures were $6440000 on March 1, $5260000 on June 1, and $8850000 on December 31. Bonita Industries borrowed $3190000 on January 1 on a 5-year, 11% note to help finance construction of the building. In addition, the company had outstanding all year a 9%, 3-year, $6440000 note payable and an 10%, 4-year, $12650000 note payable.What are the weighted-average accumulated expenditures? $9860000 $20550000 $8435000 $11700000
Answwr only
On December 31, 2019, Pronghorn Inc. borrowed $4,140,000 at 13% payable annually to finance the construction of a new building. In 2020, the company made the following expenditures related to this building: March 1, $496,800; June 1, $828,000; July 1, $2,070,000; December 1, $2,070,000. The building was completed in February 2021. Additional information is provided as follows. 1. Other debt outstanding 10-year, 14% bond, December 31, 2013, interest payable annually $5,520,000 6-year, 11% note, dated December 31, 2017, interest payable annually $2,208,000 2. March 1, 2020, expenditure included land costs of $207,000 3. Interest revenue earned in 2020 $67,620 (a) Determine the amount of interest to be capitalized in 2020 in relation to the construction of the building. The amount of interest %24
EEE Co. decided to construct a building to expand its operations. The entity decided to obtain a 5-year specific loan from EFF Bank for $10.000.000 at 12% on December 31, 2018, to finance the construction of the building. The construction started on January 2, 2019 and the building was completed on December 31 of the same year. Payments were made as follows: January 2- $1,500,000 April 1- $2,000,000 June 1- $2,100,000 October 1- $1,700,000 December 1- $2,200,000. How much borrowing cost shall be capitalized? A .$1,100,000 B. $1,140,000 C. $1,200,000 D. $580,000 Can you please answer this proven by a solution?
Road Ltd started construction of equipment, a qualifying asset in terms of IAS23 Borrowing costs, for its own use in 2020. Road Ltd finances the construction of the equipment through a general loan that bears interest at 10% per year, compounded annually. No repayments were made on the loan during 2021. R500 000 was incurred on the project during 2020. The following costs were incurred evenly (paid evenly during each month) during the construction of the equipment in 2021: 1 January 2021 - 31 May 2021: R50 000 per month 1 June 2021 - 31 December 2021: R40 000 per month Required Calculate the amount of borrowing costs that should be capitalised to the cost of the equipment for the year ended 31 December 2021.
Ajay
Jacob Company started construction on a building on January 1, 2020 and completed construction on December 31, 2020. Jacob had only two interest notes outstanding during the year and both of these notes were outstanding for all 12 months of 2020. The following information is available: What is the cost of the building on December 31, 2020?
On December 31, 2024, Tamarisk Inc. borrowed $3,960,000 at 13% payable annually to finance the construction of a new building. In 2025, the company made the following expenditures related to this building: March 1, $475,200; June 1, $792,000; July 1, $1,980,000; December 1, $1,980,000. The building was completed in February 2026. Additional information is provided as follows. 1. 2. 3. (a) Other debt outstanding: 10-year, 14% bond, December 31, 2018, interest payable annually 6-year, 11% note, dated December 31, 2022, interest payable annually March 1, 2025, expenditure included land costs of $198,000. Interest revenue of $64,680 earned in 2025. Your answer is correct Determine the amount of interest to be capitalized in 2025 in relation to the construction of the building. The amount of interest $ eTextbook and Media Date Prepare the journal entry to record the capitalization of interest and the recognition of interest expense, if any, at December 31, 2025. (Credit account titles are…
PINAUTANG started constructing a building for its own use in January 1, 2020. PINAUTANG provided the following information related to the construction: Outstanding loans of the Company at January 1, 2020: Interest Interest Rate Amount of loan Cost 15% P10,000,000 P 1,500,000 5% 30,000,000 1.500.000 Total P40,000,000 P3.000.000 On January 1, 2020, PINAUTANG also borrowed P5,000,000 at 12% per annum, to specifically fund its expected construction on March 1, 2020. January 1, 2020 P1,000,000 May 31, 2020 3,000,000 July 1, 2020 8.000.000 November 31.2020 6.000.000 December 31. 2020 2.000.000 How much is the total cost of the constructed asset as of December 31,2020? The amount of interest expense taken to profit or loss for 2020 is?