Komano Berhad purchased a piece of land on 1 April 2018 to be used as its warehouse site for RM120,000. In order for Komano Berhad to effectively use the site, a vacant and unoccupied old building on the land was demolished. A new building was then contructed and completed on 31 December 2018. The costs incurred during the period are listed below:

Legal fees for obtaining legal tittle of the land RM 4,000

Demolition of the vacant building RM 8,000

Fees for architects in erecting the new building RM24,000

Property taxes on land (Beginning 1 April 2017) RM6,000

Loan obtained to construct the land, 10% RM100,000

Construction costs RM300,000

Scrapped materials resulting from the demolition of the old building were sold for RM4,000.

Required:

1. Ascertain the amount that Komano Bhd should capitalise as the cost of the land and the cost of new building, separately.
2. Explain why each of the items listed were included or not included in your answer to part (a), justifying your answer by reffering to the requirements outlined in MFRS 116 and MFRS 123.