CHAPTER $42$

PROPERTY, PLANT AND EQUIPMENT Acquisition cost

Problem $42-1($AICPA Adapted$)$

Tower Company made the following acquisitions during the year:

Purchased for P$5,400,000,$ including appraiser fee of P$50,000.$ a warehouse building and the land on which it is located.

The land had an appraised value of $P2,000\mathrm{.}000$ and original cost of P$1,400,000.$ The building had an appraised value of P$3\mathrm{.}000\mathrm{.}000$ and original cost of $P2\mathrm{.}800,000.$

What amount should be reported as cost of land?

a$.2,160\mathrm{.}000$

b$.2\mathrm{.}000\mathrm{.}000$

c$.2,140,000$

d$.2\mathrm{.}180\mathrm{.}000$

What amount should be reported as cost of building?

a$.3,000\mathrm{.}000$

b$.3,240\mathrm{.}000$

c$.3\mathrm{.}210\mathrm{.}000$

d$.3,270,000$

Solution $+2-1$

Question $1$ Answer a

Question $2$ Answer.b

$\backslash$table$[[\backslash$table$[[$Land$],[$Building$]],$Appraised value,Fraction,Allocated cost$],[\backslash$table$[[2,000\mathrm{.}000$