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Page 8 Numbers 38, 39, 40, 41 and 42 On January 1, 2020, Ciri Company received a grant of P7,000,000 from the Philippine government to compensate for massive losses incurred because of a recent earthquake. The grant requires no fulfillment of certain conditions. The grant was made for the purpose of giving immediate financial support to the entity. It will take Ciri 2 years to reconstruct its facilities. On March 1, 2020, Yennefer Company purchased land for an office site by paying P810,000 cash. Yennefer began construction on the office building on March 1. The following expenditures were incurred for construction: Date Expenditures March 1 540,000 April 1 756,000 May 1 1,350,000 June 1 2,160,000 The office was completed and ready for occupancy on July 1, 2020. To help pay for construction, P1,080,000 was borrowed on March 1, 2020 on a 9%, 3-year note payable. Other than the construction note, the only debt outstanding during 2020 was a P2,000,000, 12%, 6-year note payable dated January 1, 2020. Data pertaining to Sol Company's ordinary share investments for the year 2020 are as follows: * On October 1, 2020, Sol received P500,000 liquidating dividend from A Company. Sol owns a 10% interest in A Company. * Sol owns a 20% interest in B Company which declared a P3,000,000 cash dividend on November 15, 2020 to stockholders of record on December 15, 2020 payable on January 15, 2021. Sol does not have ability to exercise significant influence over B Company. * On December 1, 2020, Sol received from C Company a dividend in kind of automobile. It has a fair value of P700,000. The carrying amount of the asset in C's books is P500,000. Sol owns 8% of C Company. 38. What amount of income from government grant should Ciri recognize for the year 2020? a. 3,500,000 b. 7,000,000 c. 5,000,000 d. 0 39. What amount of capitalized borrowing cost should Yennefer recognize? a. 281,000 b. 232,200 c. 205,200 d. 230,040 40. What amount of interest expense should Yennefer recognize for the year 2020? a. 115,800 b. 321,000 90,960 d. 40,000 c. 41. What is the total cost of land and office building to Yennefer? a. 5,821,200 b. 5,616,000 c. 3,337,200 d. 5,897,000 42. What amount of dividend income should Sol recognize? a. 1,800,000 b. 1,200,000 c. 1,300,000 d. 700,000