What is the interest expense for 2020? A. P1,800,000B. P1,200,000C. P1,600,000D. P1,000,000 Black Widow Company borrowed P15,000,000 at 12% to finance in part the construction of a newbuilding on January 1, 2020 and in part for general purposes.The loan is to be repaid commencing the month following completion of the building.Expenditures for the completed structure totaled P10,000.000 during the year ended December 31,2020. These expenditures were incurred evenly throughout the year.The entity earned interest of P200,000 for the year on the unexpended portion of the loan.

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What is the interest expense for 2020? A. P1,800,000 B. P1,200,000 C. P1,600,000 D. P1,000,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.

Question

What is the interest expense for 2020?

A. P1,800,000

B. P1,200,000

C. P1,600,000

D. P1,000,000

Black Widow Company borrowed P15,000,000 at 12% to finance in part the construction of a new
building on January 1, 2020 and in part for general purposes.
The loan is to be repaid commencing the month following completion of the building.
Expenditures for the completed structure totaled P10,000.000 during the year ended December 31,
2020. These expenditures were incurred evenly throughout the year.
The entity earned interest of P200,000 for the year on the unexpended portion of the loan.

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