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.
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.
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
Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments
Section: Chapter Questions
Problem 18E
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Question
What amount of interest is capitalized on December 31, 2020?
A. P1,200,000
B. P1,000,000
C. P600,000
D. P400,000
Transcribed Image Text: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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