On 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?
On 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?
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
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 14RE: On January 1, 2019, Boater Company issues a 20,000 non-interest-bearing, 5-year note for equipment....
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On 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?
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