The following information pertains to equipment constructed by a firm for its own use. The construction is finished.Materials used in construction, P 400,000Labor cost during construction, P 170,000Fringe benefits on above labor, P 60,000Incremental overhead due to construction, P 80,000Interest expense on debt during construction, P 20,000The interest expense meets the requirements for interest capitalization.The market value of the equipment immediately after construction was completed was P650,000.QUESTION:What is the loss on construction incurred by the firm?zeroP 60,000P 80,000P 20,000

There are two types of expenses in the business. Some expenses need to be capitalized with the cost…

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Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 18RE

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The following information pertains to equipment constructed by a firm for its own use. The construction is finished.

Materials used in construction, P 400,000
Labor cost during construction, P 170,000

Fringe benefits on above labor, P 60,000

Incremental overhead due to construction, P 80,000
Interest expense on debt during construction, P 20,000

The interest expense meets the requirements for interest capitalization.

The market value of the equipment immediately after construction was completed was P650,000.

QUESTION:

What is the loss on construction incurred by the firm?

zero

P 60,000

P 80,000

P 20,000

Definition Definition Benefits in addition to compensation that companies give to their employees. Fringe benefits can boost morale and productivity and keep employees motivated. Companies often use fringe benefits as a competitive advantage to recruit and retain employees. Examples of fringe benefits include pensions, vacation time, tuition reimbursement, free or subsidized meals, and gym memberships.

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