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
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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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
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