What amount of interest should be capitalized

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During 2021, NCT Company constructed asset costing P10,000,000. The weighted average expenditures totaled P6,000,000. To help pay for the construction, P4,400,000 was borrowed at 10% on January 1, 2021. Funds not needed for construction were temporarily invested in short-term securities yielding P90,000 in interest revenue. Other than the construction funds borrowed, the only other debt outstanding during the year was P5,000,000, 10-year, 9% note payable dated January 1, 2020.

Problem 1: What amount of interest should be capitalized during 2021?

Problem 2: What amount should be reported as interest expense for 2021?

Reference no: EM132996034

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