Applied auditing problem.

PROBLEM 1 The following items are included in the PPE section of the audited financial statement of financial position of Luffy Corp. as of December 31, 2019: Land P 2,875,000.00 Building 11,125,000.00 Leasehold Improvements 8,250,000.00 Machinery and Equipment 10,937,500.00 1 Land A was acquired for P 10,625,000. In connection with the acquisition, Luffy paid a P 637,500 commission to a real estate agent. Costs of P 437,500 were incurred to clear the land. During the course of clearing the land, timber and gravel were recovered and sold for P 162,500. 2 Land B and old building was acquired for P 6,250,000. On the acquisition date, the fair value of the land was P 3,500,000 and the fair value of the building was P 1,500,000. The old building was demolished at a cost of P 512,500 shortly after acquisition. A new building to be used as an owner-occupied property was constructed for P 4,125,000 plus the following costs: Excavation fees P 475,000.00 Architectural design fees 137,500.00 Building permit fee 31,250.00 Imputed interest on funds used during the construction (stock financing) 106,250.00 The building was completed and occupied on December 30, 2020. 3 Land C was acquired for P 8,125,000 with the intention of selling it within 12 months from the date of acquisition. 4 During December 2020, Costs of P 1,112,500 were incurred to improve leased office space. The related lease will terminate on December 31, 2022 and is not expected to be renewed. 5 A group of machines was purchased under a royalty agreement that provides for payment of royalties based on units of production for the machines. The invoice price of the machines was P 1,087,500, freight cost were P 41,250, installation costs were P 30,000 and royalty payments for 2020 were P 218,750. REQUIRED: Determine the balance of: 1 Land 2 Buildings 3 Leasehold Improvements 4 Machinery and Equipment 5 Land C should be reported in the company's December 31, 2020 statement of financial position underOn June 1, 2019, Panday Corporation purchased as a 'held for collection' investment 6,000 of the P1,000 face value, 8% bonds of Pira Corporation. Panday Corporation has the positive intention and ability to hold these bonds to maturity. The bonds were purchased to yield 10% interest. Interest is payable semi-annually on December 1 and June 1. The bonds mature on June 1, 2025. On November 1, 2020, Panday Corporation sold the bonds for a total consideration of P 5,887,500. REQUIRED: Based on the above and the result of your audit, determine the following: (Round off present value factors to four decimal places) 1 The purchase price of the bonds on June 1, 2019 is 2 The carrying amount of the investment in bonds as of December 31, 2019 is 3 The interest income for the year 2020 is 4 The gain on sale of investment in bonds on November 1, 2020 is 5 BONUS