Problem VI.

Selected accounts included in the property, plant and equipment ofFres Co. had the followingbalances:

LandP 132,500

Land Improvements20,000

Building600,000

Machinery195,000

The following transactions were completed during the year:

1.Expenditures amounting to P150,000 were paid to the government for special assessment made to the lot.

2.A lot with a plant facility on it was acquired in exchange for 12,500 shares of Fres' stocks whose par value is P100. On the date of acquisition, the stock had a quoted price per share of P150. The book value of the plant facility is carried at P375,000; P125,000 of which pertains to the plant facility and the remainder to land. At the time of acquisition, the land had a market value of P500,000 and the building had a market value of P900,000.

3.Exchanged old equipment with a cost of P20,000 and accumulated depreciation of P9,000 for a new equipment on January 1, 2000 and paid cash of P3,000. The market value of the old equipment was P16,000 .

4.Purchased land at a cost of P107,500 that included unpaid taxes of P10,000, which was assumed by Fres, and a mortgage of P27,500.

5.Additional machinery was purchased costing P350,000. The following costs were incurred inconnection with the purchase:

Installation costsP 25,000

Cost of testing the machine10,000

6.P125,000 was incurred for construction of parking lots, pavements and sidewalks. These are estimatedto last for 10 years.

Required: Prepare the journal entries to record each case above.