Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On August 1, ABC Company acquired a real property for P 4,420,000. The shares were selling on the same date at P 125. The fair

On August 1, ABC Company acquired a real property for P 4,420,000. The shares were selling on the same date at P 125. The fair values are P 800,000 and P 3,200,000 for the land and building respectively.

A mortgage of P 4,000,000 was assumed by ABC on the purchase. Moreover, the company paid P 180,000 of real property taxes in the prior years.

ABC paid legal fees including title search for P 15,000. ABC also paid the local government special assessment for city improvement amounting to P 120,000.

In order to make the building suitable for the use of ABC, remodeling costs had to be incurred in the amount of P 900,000. This however, necessitated the demolition of a portion of the building, which resulted in recovery of salvage material sold for P 30,000.

Parking lot cost the company, P 320,000 while repairs in the main hall were incurred at P45,000 prior to its use.

What is the correct cost of the land?

P1,720,000

P2,535,000

P1,855,000

P1,799,000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

New Perspectives In Accounting Ethics

Authors: Emerald Group Publishing Limited

23rd Edition

1785608673, 9781785608674

More Books

Students also viewed these Accounting questions

Question

What is the method of least squares?

Answered: 1 week ago