Question
During 2020, Israel Company constructed asset costing P4,215,000. The weighted average accumulated expenditures on the asset during the current year amounted to P3,900,000. The entity
During 2020, Israel Company constructed asset costing P4,215,000. The weighted average accumulated expenditures on the asset during the current year amounted to P3,900,000.
The entity borroqws P2,000,000 at 7.5% on January 1, 2020. Funds not needed for construction were temporarily invested in short-term securities and earned P59,000 in interest revenue.
In addition to the construction loan, the entity had two other notes outstanding during the year, a P1,500,000. 10-year, 10% note payable dated October 1, 2019, and a P1,000,000. 8% note payable dated November 2, 2019.
What amount of interest should be capitalized during 2020?
A. 324,800
B. 297,500
C. 273,000
D. 265,800
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