On January 1, 20X1, SME PP incurred (and paid) the following expenditures in acquiring an administration building and the land on which it is built:

• P200,000,000 —Purchase price; 20% of the price is attributable to the land
• P20,000,000 —Value-added taxes (not included in the P200,000,000 purchase price)
• P1,000,000 —Legal costs directly attributable to the acquisition
• P500,000 —Accrued local government real property taxes (up to the date of acquisition) assumed by the entity

On December 31, 20X1, SME PP made the following assessments:

• The useful life of the building— 50 years from the date of acquisition
• The residual value of the building— P11,200,000
• The entity will depreciate the building using the straight-line method
• Fair value of the land and building are P50,000,000 and P175,500,000 respectively.

 

Required

Prepare journal entries to record the effects of the property, plant and equipment in the accounting records of SME PP for the year ended December 31, 20X1. Assume SME PP has elected the revaluation model and has chosen the elimination approach to revaluation.