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During the year 2020, Akasia Maju Bhd (AMB) purchased a piece of land with an existing building for RM1,125,000. The land was valued at RM1,050,000

During the year 2020, Akasia Maju Bhd (AMB) purchased a piece of land with an existing building for RM1,125,000. The land was valued at RM1,050,000 and the building at RM75,000. AMB demolished the building and constructed a new building as headquarters on the site. The new building and land improvement are expected to last for 80 years with no residual value and the construction was fully completed by the end of the year 2020.

The following represents the various items related to the project in year 2020:

Items

RM

Lawyers fee to close the purchase deal

22,500

Cost of land fill and clearing

18,000

Architects fee

120,000

Fencing around the land

60,000

Cost of demolishing existing building

97,500

Interest on financing of construction paid during construction

282,000

Receipts from sale of demolition scraps

15,000

Construction costs

1,200,000

Landscaping (trees and shrubs)

30,000

Parking lots and concrete walks on the property

180,000

Insurance premium during construction period

18,000

Moving costs from old headquarters to new headquarters

150,000

To accommodate the mission of improving productivity and efficiency, the company also bought a new special equipment and made the following payments.

Items

RM

Manufacturers list price

4,303,500

Trade discount

37,500

Delivery charge

75,000

Installation charge

50,250

Additional components to increase capacity

107,250

Service and maintenance

24,750

Replacement parts

17,000

Test runs

16,500

Small spare parts

2,600

REQUIRED:

Calculate the cost of land, land improvement, building and equipment based on MFRS 116 Property, Plant and Equipment. Please show your calculations.

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