Problem 25-6 (AICPA Adapted) Chum Company started construction of a new office building on January 1, 2020 and moved into the finished building on July 1, 2021. Of the P25,000,000 total cost of the building, P20,000,000 was incurred in 2020 evenly throughout the year. The entity's incremental borrowing rate was 12% throughout 2020, and the total amount of interest incurred.was. P1,020,000. What amount should be reported as capitalized interest on December 31, 2020? а. 1,020,000 b. 1,200,000 с. 1,500,000 d. 2,400,000
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- Dexter Construction Corporation is building a student condominium complex; it started construction on January 1, Year 1. Dexter borrowed 2.5 million on January 1 specifically for the project by issuing a 10%, 5-vear, 2.5 million note, which is payable on December 31 of Year 3. Dexter also had a 12%, 5-year, 3 million note payable and a 10%, 10-year, 1.8 million note payable outstanding all year. Calculate the weighted average interest rate on the non-construction-specific debt for Year 1. RE10-9 Refer to RE10-8. In Year 1, Dexter incurred costs as follows: Calculate Dexters weighted average accumulated expenditures.Problem 25-14 (AICPA Adapted) During 2020, Elijah Company constructed a new building at A 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 d. 2,950,000Problem 25-7 (PHILCPA Adapted) Marauder 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. 1. What amount of interest is capitalized on December 31, 2020? 1,200,000 b. 1,000,000 600,000 400,000 а. С. d. 2. What is the interest expense for 2020? а. 1,800,000 b. 1,200,000 c. 1,600,000 d. 1,000,000 CS Scanned with CamScanner
- Contact Support for textbook, writing, or account heln Balance Corporation borrowed P10,000,000 at 12% to finance in part the construction of a new office building on January 1, 2021 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 P8,000,000 during the year ended December 31, 2021. These expenditures were incurred evenly throughout the year. The entity earned interest of P80,000 for the year on the unexpended portion of the loan. What amount of interest is capitalized on December 31, 2021? What is the interest expense for 2021? O 720,000 O 1,000,000 O 1.200.000Q...1 Benson Limited is constructing a Power Plant which was completed on 31st December 2019. The company obtained a bank loan of R1,000,000 at a rate of 15% per annum to construct the Power Plant on 1st January 2019. As of 31st December 2019, Benson Limited also had the following loans outstanding: I. 18% 5-year loan Note of R1,500,000 II. 14% Debentures of R1,000,000 Expenditures on the project were made as follows: I. On the 31st March 2019, R600,000 was incurred; II. R800,000 was incurred on 30th June 2019; III. The final expenditure incurred was R300,000 on 31st December 2019. During the year Benson Limited invested R400,000 of the bank loan for 2 months at an interest of 9% per annum. Required: Determine the amount of borrowing costs to be capitalized and expensed.ABC Co. had these loans outstanding for the year 2020: Specific Loan: P1,000,000 at 10% General Loan P20,000,000 at12%. The company began a self-construction of a building on January 1, 2020 and was completed on December 31, 2020. The following expenditures were made during 2020: January 1:P1,000,000 July 1: P2,000,000 November 1: P3,000,000 Total: P6,000,000 The cost of constructed building on December 31, 2020 must be
- 11 NANGUTANG started constructing a building for its own use on January 1, 2020. NANGUTANG provided the following information related to the construction: Outstanding loans of the Company at January 1, 2020: Interest Rate Amount of loan Interest Cost 5% P10,000,000 P 500,000 10% 20,000,000 2,000,000 Total P30,000,000 P2,500,000 Construction expenditures: July 1, 2020 7,000,000 November 31,2020 3,000,000 December 31, 2020 1,000,000 The amount of borrowing cost that should be charged to profit or loss for the period is? Group of answer choices 340,142 312,375 2,208,450 2,187,625Answer please Accounting The Great Company started the construction of a building on March 1, 2020 and finished it on June 30, 2021. You have the following information about the expenditures incurred on the construction in 2020: March 1 $120,000 April 30 290,000 October 1 340,000 November 1 275,000 The Great company took out a one-year loan of $500,000 on April 1, 2020. The annual interest rate is 6%. The company’s general borrowings are as follows: Amount Annual interest rate 2-year Note payable, issued on March 1, 2019 $120,000 6% 1-year bank loan taken out on April 1, 2020 210,000 4% 2-year bank loan taken out on October 1, 2018 340,000 3% Required- Assuming IFRS, determine the carrying value of the asset under-construction on December 31, 2020.solve both a and b Acruni Co. had the following loans in place at the beginning of 2019. 1 January 2019 GHC m10% Bank loan repayable 2020 1209.5% Bank loan repayable 2021 808.9% debenture repayable 2024 100On 1 January 2019, Acruni Co began construction of a qualifying asset, a piece of machinery for a hydroelectric plant, using existing borrowings. Expenditure drawndown for the construction was GHc30 million on 1 January 2019, and GHc20million on 1 October 2019. Surplus funds were invested temporarily at a rate of 2%. Requireda) Calculate the borrowing costs that can be capitalized for the piece ofmachinery. b) Compute the cost of the machinery that will be reported in the statementof financial position as at December ,2019
- See Page1' Illustration PROBLEM On January 1, 2019, Cagayan Company took out a loan of P24,000,000 in order to finance specifically the renovation of a building. The renovation work started on the same date. The loan carried annual interest at 10%. Work on the building was substantially complete on October 31, 2019. The loan was repaid on December 31, 2019 and P200,000 investment income was earned in the period to October 31 on the proceeds of the loan not yet used for the renovation. What is the amount of borrowing cost to be included in the cost of the building? a. 2,400,000 b. 2,200,000 C. 2,000,000 d. 1,800,000 34On January 1, 2021, the Highlands Company began construction on a new manufacturing facility for its own use. The building was completed in 2022. The company borrowed $1,500,000 at 8% on January 1 to help finance the construction. In addition to the construction loan, Highlands had the following debt outstanding throughout 2021: B 4 12% bonds Long-term note, 8% Required: Construction expenditures incurred during 2021 were as follows: January 1 March 31 June 30 September 30 December 1 $600,000 $1,200,000 $800,000 $600.000 $300,000 Calculate the amount of interest capitalized for 2021 using the specific interest method. (Do not round the intermediate calculations. Round your percentage answers to 1 decimal place.) Expenditure Average Date January 1 March 31 June 30 September 30 December 1 Avg. accumulated expenditures 5,000,000 3,000,000 Average accumulated expenditures X X X X X Amount Weight X X IIII|| Interest Rate P Capitalized InterestOn January 1, 2020, Karakaraka Co. started construction of a new office building on January 1, 2020, and moved into the finished building on July 1, 2021. Of the P25,000 total cost of the building, P20,000 was incurred in 2020 evenly throughout the year. The entity’s incremental borrowing rate was 12% throughout 2020, and the total amount of interest incurred was P1,020,000. What amount should be reported as capitalized interest on December 31, 2020?