Reference no: EM133118216
Questions -
Q1. On January 1, 2018, a new building was purchased at a cost of P30 million. Depreciation was computed on the straight line basis at 4% per year. On December 31, 2019, after recording the depreciation for the year, the building was appraised and was reported to have a fair value of P36 million and an estimated remaining life of fifteen years. This was the first revaluation made on the building since its acquisition.
It is the company's policy to transfer a portion of the revaluation surplus to retained earnings as the asset is being used for its remaining life.
What is the revaluation surplus balance reported in the financial statements at December 31, 2021?
Q2. Jules Company started construction of a low-rise building for its own use on January 1, 2021. Upon completion at December 31, 2021, construction costs totaled P21,500,000, which were incurred evenly during the construction period. Prior to the start of construction, Jules Company obtained a P10M, 12%, 5-year loan from ABC Bank to finance the project. During periods that construction costs were low, the company temporarily investment the proceeds and earned interest income of P50,000. In addition to the specific borrowing, prior to the construction, the company had a general borrowing amounting to P600,000 with interest of 15% and a four-year term that was used in part in the self construction?
How much is the capitalized interest on the self-constructed building of Jules Company?
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