Question
The Mall Corporation had the following items recorded in its property and equipment account as at December 31, 2018: Items Debited to the account: Cash
The Mall Corporation had the following items recorded in its property and equipment account as at December 31, 2018:
Items Debited to the account:
Cash paid to purchase a land with a dilapidated building at the beginning of the year
660,000
Mortgage assumed on the land purchased
240,000
Commission paid to real estate agent
150,000
Attorney's fee in connection with this acquisition above
75,000
Cost of razing the old structure
120,000
Grading, leveling, and landscaping costs (Permanent improvement)
50,000
Special assessment by for public improvement
25,000
Interest on loan for construction of a new building (based on average costs incurred)
81,000
Building construction labor costs
800,000
Building construction materials
672,000
Cost of temporary fencing the property during the construction
28,000
Cost of permanent fencing
86,000
Architect's fees
112,500
Cost of paving driveway and parking lot
70,000
Excavation expenses, including a P90,000 cost of excavation equipment
135,000
Fixed overhead charged to the building
300,000
Cost of temporary quarters for construction crew
150,000
Cost of temporary building to house tools and materials
90,000
Insurance on building during construction
31,500
Profit on construction, as the difference between the appraised value of the asset after construction and actual cost incurred
360,000
Payments made to construction workers injured during the construction not covered by insurance
90,000
Payment to tenants of the old building to vacate the premises
90,000
Modification of building ordered by building inspectors
225,000
Property taxes on land covering the period 2015-2018
240,000
Interest that would have been earned had the money used during the period of construction been invested in the money market
150,000
Invoice cost of machinery acquired
381,000
Freight, unloading, and delivery charges
22,500
Allowances, hotel accommodation etc. paid to foreign technicians during the installation and test runs of machines
20,000
Royalty payment on machines purchased (units produced)
75,000
Items Credited to the account
Salvage proceeds from demolished building
15,000
Proceeds from sale of the excavation equipment
30,000
Proceeds from sale of produce of the machinery test runes
3,500
In addition, you discovered that compensation for the worker's injury was necessary because it was not covered by the insurance policy purchased by the company. Accident insurance that would have covered the same would have cost P20,000. The modifications ordered by the building inspectors resulted from poor planning by the company.
11. Cost of Land is:
a. 1,380,000 c. 2,565,000 b. 2,375,000 d. 1,470,000
12. Cost of building is:
a. 2,365,000 c. 2,965,000 b. 2,565,000 d. 1,825,000
13 Cost of Land improvement is:
a. 426,000 c., 156,000 b. 196,000 d. 420,000
14. Cost of machinery and equipment is:
a. 450,000 c. 492,000 b. 410,000 d. 420,000
15. the amount should be expensed in 2018:
a. 450,000 c. 492,000 b. 410,000 d. 420,000
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started