Problem 8 and 9

Problem 25-8 (IAA) The third year of a construction project of Jamboree Company began with a P3,000,000 balance in construction in progress Included in that figure is P600,000 of interest capitalized in the first two years. Construction expenditures during the third year totaled P8,000,000 which were incurred evenly throughout the entire year. The entity has over P30,000,000 in interest-bearing debt outstanding in the third year at a weighted average rate of 9% What amount of interest for the third year is capitalized? a. 360,000 b. 630,000 C. 936,000 d. 990,000 Problem 25-9 (IAA) Jugular Company started construction on a building on January 1 of the current year and completed construction on December 31 of the same year. The entity had only two interest-bearing notes outstanding during the year, and both of these notes were outstanding for all 12 months of the year. The following information is available: Average accumulated expenditures 2,500,000 Ending balance in construction in progress before capitalization of interest 6% note incurred specifically for the project 3,600,000 9% long-term note 1,500,000 5,000,000 What is the total cost of the building? a. 3,780,000 b. 3,680,000 c. 3,750,000 d. 3,825,000