need help with these auditing problems, the first 12 theories, and multiple choice problems.
PROBLEM 1 You were engaged by SGB Corporation to audit their financial statements as of and for the period ended December 31, 2018. The entity incurred all of the following transactions related to Property, Plant and Equipment during the first half of 2018: Transaction Cost Recorded as Purchase price of land 10,540,000 Land Fees for registration and transfer of the title of the land 80,000 Expense Demolition cost of old building 250,000 Expense Special assessment for public roadways and other government projects 100,000 Land Improvements Construction permit fee 75,000 Expense Architect's fees 350,000 Building Excavation costs 500,000 Land Cost of constructing the building 35,000,000 Building Cost of temporary quarters 140,000 Land Improvements Cost of constructing pavements and parking lot 950,000 Land Improvements Cost of constructing a permanent fence after the completion of the construction of the building 480,000 Building Purchase price of machineries and equipment to be used in the normal operations of the entity 2,500,000 Machineries and Equipment Freight charges on the machineries and equipment 150,000 Expense Insurance costs during the delivery of the machineries and equipment 100,000 Expense Discount on early payment for the purchase of machineries and equipment; the discount was not taken 25,000 Installation costs of the machineries and equipment 95,000 Expense Based from your audit procedures, you were able to ascertain the following: The pavements and parking lot are not part of the blueprint of the building. The discount on early payment for the purchase of machineries and equipment was ignored by the entity; the and equipment were e recd rdedthe discount was not taken Installation costs of the machineries and equipment 5 090 Expense Based from your audit procedures , you were able to ascertain the following The pavements and parking lot are not part of the blueprint of the building The discount on early payment for the purchase of machineries and equipm ent was ignored by the entity ; the payable for such purchase , and the machineries and equipment w it were recorded at gross The entity received proceeds totalling to P 45 000 and recorded the amount as income . Further investigation revealed that the proceeds came from the initial testing of the equipmen The entity also temporarily operated the construction site as a parking space during the construction period . Proceeds totalling to $280 060 were received , and the amount was treated by your client as a deduction from the cost of the building The estimated useful life of each of the accounts under PPE are as follows Building 50 years Machineries and equipment - 20 year Land Improvements - 20 year The building's residual val He is P50 0 0Or The entity started using all PPE items on july 1 30 BREAK BABIES MORNING Phone The straight - line method is used and the company based is depreciation expense from the amounts capitalized as stated in the transactions above the totaldep tion expense recorded in 2018 wa OF THAT HAD VOTERS + 75 320 $ 4 42 750 Requirements : What is the correct initial cost of the land 2 . What is the correct initial cost of the building ? 3 . What is the correct initial cost of machin cries and equipment ? 4 . What is the corre at carrying value of Property , Plant and Equipment as of December 31 2018 ? 5 . How much is the overstatement of under statement on the 20 IS net income of the entity ? madden
