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What the interest capitalized was

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On January 2, 2016, Indian River Groves began construction of a new citrus processing plant. The automated plant was finished and ready for use on September 30, 2017. Expenditures for the construction were as follows:

January 2, 2016 P200,000

September 1, 2016 600,000

December 31, 2016 600,000

March 31, 2017 600,000

September 30, 2017 400,000

Question 1: Indian River Groves borrowed P1,100,000 on a construction loan at 12% interest on January 2, 2016. This loan was outstanding during the construction period. The company also had P4,000,000 in 9% bonds outstanding in 2016 and 2017.

The interest capitalized for 2016 was:

Select one:

a. P60,000

b. P192,000

c. P180,000

d. P48,000

Reference no: EM132568010

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