Wakanda Company borrowed P4,000,000 on a 10% note payable to finance a new warehouse which the entity is constructing for own use. The only other debt of the entity is a P6,000,000, 12% mortgage payable on an office building. At the end of the current year, average accumulated expenditures on the new warehouse totaled P4,750,000. What amount of interest should be capitalized? A. P400,000 B. P475,000 C. P490,000 D. P522,500
Wakanda Company borrowed P4,000,000 on a 10% note payable to finance a new warehouse which the entity is constructing for own use. The only other debt of the entity is a P6,000,000, 12% mortgage payable on an office building. At the end of the current year, average accumulated expenditures on the new warehouse totaled P4,750,000. What amount of interest should be capitalized? A. P400,000 B. P475,000 C. P490,000 D. P522,500
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Wakanda Company borrowed P4,000,000 on a 10% note payable to finance a new warehouse which the entity is constructing for own use.
The only other debt of the entity is a P6,000,000, 12% mortgage payable on an office building.
At the end of the current year, average accumulated expenditures on the new warehouse totaled P4,750,000.
The only other debt of the entity is a P6,000,000, 12% mortgage payable on an office building.
At the end of the current year, average accumulated expenditures on the new warehouse totaled P4,750,000.
What amount of interest should be capitalized?
A. P400,000
B. P475,000
C. P490,000
D. P522,500
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