Amount paid to the contractor for the building constructed P13,000,000 Building permit fee 120,000 Excavation cost 110,000 Architect fee 440,000 Interest that would have been earned had the money used during the period of construction been invested in the money market 330,000 Invoice cost of machine acquired, terms 3/10, n/30 6,500,000 Freight, unloading and delivery charges for machine acquired 100,000 Custom duties and other charges 270,000 Allowance and hotel accommodation, paid to foreign technicians during installation and test run of machine 520,000 Royalty payment on machines purchased (based on units produced and sold) 240,000 Cash paid for the purchase of land (none was allocated to old building) 10,000,000 Mortgage assumed on the land purchased 2,100,000 Realtor’s commission 650,000 Legal fees, realty taxes and documentation expenses 900,000 Amount paid to relocate persons squatting on the property 180,000 Cost of tearing down an old building on the land 380,000 Amount recovered from the salvage of the old building demolished 290,000 Cost of fencing the property 520,000
During the current fiscal year, Heinrich Corp. incurred the following costs related to property, plant, and equipment:
Amount paid to the contractor for the building constructed P13,000,000 Building permit fee 120,000 Excavation cost 110,000 Architect fee 440,000 Interest that would have been earned had the money used during the
period of construction been invested in the
installation and test run of machine 520,000 Royalty payment on machines purchased (based on units produced
and sold) 240,000 Cash paid for the purchase of land (none was allocated to old building) 10,000,000 Mortgage assumed on the land purchased 2,100,000 Realtor’s commission 650,000 Legal fees, realty taxes and documentation expenses 900,000 Amount paid to relocate persons squatting on the property 180,000 Cost of tearing down an old building on the land 380,000 Amount recovered from the salvage of the old building demolished 290,000 Cost of fencing the property 520,000
- How much should be capitalized as the cost of the land?
- How much should be capitalized as the cost of land improvements?
- 3. How much should be capitalized as the cost of the building?
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