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Which costs might be included in initial cost of equipment

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Borrowings (in part):

The company capitalizes interest on assets constructed for its theme parks, resort, and other property. In 20X3, 20X2 and 20X1, total interest capitalized was P110 million, P73 million and P77 million, respectively.

Questions

Question 1: Describe to Michael what it means to capitalize an expenditure. What is the general rule for determining which costs are capitalized when property, plant and equipment is acquired?

Question 2: Which costs might be included in the initial cost of equipment?

Question 3: In what situations is interest capitalized rather than expensed?

Question 4: What is the three-step process used to determine the amount of interest capitalized?

Reference no: EM132727008

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