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Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN: 9781337788281
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
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Question
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
- 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
Expert Solution
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