On June 1, 2019, Sirius Company began construction of a new manufacturing plant. The plant was completed
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Question:
On June 1, 2019, Sirius Company began construction of a new manufacturing plant. The plant was completed on October 31, 2020. Expenditures on the project were:
July 1, 2019P5,000,000
October 1, 20193,000,000
February 1, 20203,000,000
April 1, 20202,000,000
September 1, 20202,000,000
October 1, 2020500,000
On July 1, 2019, the entity obtained a P7,000,000 construction loan with a 6% interest rate. The loan was outstanding through the end of October 2020. The only other interest-bearing debt was a long-term note for P10,000,000 with an interest rate of 8%. This note was outstanding during 2019 and 2020. The fiscal year-end is December 31.
QUESTIONS:
- What amount of interest should be capitalized in 2019?
- What amount of interest should be capitalized in 2020?
- What is the interest expense for 2020?
Expert Answer:
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