Determine the following as a result of your audit: 16. How much is the cost of Land disclosed in its notes to financial statement as component of property, plant and equipment – net as of December 31, 2022? 17. How much is the cost of Land Improvements disclosed in its notes to financial statement as component of property, plant and equipment – net as of December 31, 2022? 18. How much is the cost of Building disclosed in its notes to financial statement as component of property, plant and equipment – net as of December 31, 2022? 19. How much is the cost of Machineries disclosed in its notes to financial statement as component of property, plant and equipment – net as of December 31, 2022? 20. How much is the amount of Depreciation expense reported by Fix You Company in its statement of comprehensive income for the period ending December 31, 2022?
Determine the following as a result of your audit: 16. How much is the cost of Land disclosed in its notes to financial statement as component of property, plant and equipment – net as of December 31, 2022? 17. How much is the cost of Land Improvements disclosed in its notes to financial statement as component of property, plant and equipment – net as of December 31, 2022? 18. How much is the cost of Building disclosed in its notes to financial statement as component of property, plant and equipment – net as of December 31, 2022? 19. How much is the cost of Machineries disclosed in its notes to financial statement as component of property, plant and equipment – net as of December 31, 2022? 20. How much is the amount of Depreciation expense reported by Fix You Company in its statement of comprehensive income for the period ending December 31, 2022?
Chapter9: Acquisitions Of Property
Section: Chapter Questions
Problem 42P
Related questions
Question
Determine the following as a result of your audit:
16. How much is the cost of Land disclosed in its notes to financial statement as component of property,
plant and equipment – net as of December 31, 2022?
17. How much is the cost of Land Improvements disclosed in its notes to financial statement as
component of property, plant and equipment – net as of December 31, 2022?
18. How much is the cost of Building disclosed in its notes to financial statement as component of
property, plant and equipment – net as of December 31, 2022?
19. How much is the cost of Machineries disclosed in its notes to financial statement as component of
property, plant and equipment – net as of December 31, 2022?
20. How much is the amount of
comprehensive income for the period ending December 31, 2022?
Transcribed Image Text:LOVE Corporation started its operations at the beginning of 2022. It had the following property
acquisitions and
other expenditures during the year:
1. Cash paid to purchase at the beginning of the year Real Property A, comprised of a land
with a dilapidated building P4,800,000
2. Cash paid on March 31 to purchase Real Property B comprised of a land with a building
to be demolished. The land had a fair market value of P3.5M while the building had a fair
market value of P500,000. 4,200,000
3. Cash paid to purchase on June 30 Real Property C comprised of a land with a warehouse
to be remodeled for future use (9-year useful life after remodeling). The land had a fair
value of P2.8M. 4,500,000
4. Option money: Real Property A-P200,000; B - P180,000; C-120,000; Other properties
not acquired-P100,000 600,000
5. Brokers and lawyer's fees and commission on real estate properties acquired: Real
Property A-P240,000; B-450,000; C-360,000) 1,050,000
6. Unpaid real property taxes assumed by Fix You: P120,000 for Property A for 2021 and
2022; P160,000 for Property B for 2022 and P80,000 for Property C for 2022 360,000
7. Mortgage payable assumed on Real Property A 900,000
& Grading, leveling and landscaping cost on Real Prop. A (Permanent Improvement) 660,000
9. Special assessment by Quezon City government on Real Property B for road projects
where the property is located 220,000
10. Special assessment by Baguio City government on Real Property C for sewerage system
in the area where the property is located 260,000
11. Cast of demolition of unwanted structures: Real Prop. A-P450,000; B-P380,000 830,000
12. Cost of remodeling the warehouse in Real Property C 560,000
13. Payment to current tenants of the real properties to vacate the premises: Real Property B
- P190,000; C-P220,000 410,000
14. Excavation cost on Real Property A, including cost of an excavation equipment with no
further use for the company P250,000. 530,000
15. Building construction costs: Real Property A-P1,860,000; B-P2,200,000 4,060,000
16. Cost of temporary structures while construction is in progress including the cost of their
removal (temporary fencing, temporary quarters for laborers, temporary sheds for tools
and materials): Real Property A-P120,000; B-P200,000 320,000
17. Cost of permanent fencing, paving driveways and parking lots, cost of constructing flower
boxes and side-walks, cost of installing lamp posts on Real Property C. 1,650,000
18. Interest on loans to finance construction of Bldg. B (incurred during the construction period)
145,000
19. Insurance on the Building A (60% incurred during construction period, 40% after
construction period) 250,000
20. Profits on construction, as the difference between the appraised value of the assets after
construction and actual costs incurred (40% Building A; 60% Building B) 900,000
21. Payments made to construction workers injured during the construction of Building B not
covered by insurance 500,000
22. Cost of modifications to Building A ordered by City of Manila which would have been
avoided had proper construction planning been made by the management 300,000
23. Interest that would have been earned had the money used during the period of
construction been invested in the money market 1,400,000
24. Amount paid for machineries purchased during the year (Trade and cash discounts taken
on the machineries purchased, P220,000) 2,600,000
25. Freight, handling, insurance while in-transit, installation costs on machineries 650,000
26. Test-run costs on machineries 210,000
27. Employee training costs (for them to be able to operate the machineries) 220,000
28. Periodic royalty fees on technologies used by the machineries 120,000
29. Bouti, repairs and maintenance costs on machineries 80,000
Audit notes:
a. The company generated P170,000 from sales of salvaged materials from the demolition of
unwanted
structures in Properties A and B. (60% Real Property A: 40% Real Property B).
b. The company sold the excavation equipment after its use for total proceeds of P80,000.
c. Proceeds from sale of products produced during the test-run of the machineries, P30,000.
d. While the Building in Property A is being constructed, the parking lot was operated
temporarily as a pay
parking facility. During the construction period, P150,000 in parking fees were collected.
e. The company's policy is to depreciate depreciable real properties half year depreciation in
year of acquisition
and to depreciate non-real properties with full year depreciation in year of acquisition. The
summary of the
inquiry of useful lives and methods of depreciation were:
|
Asset
Depreciable real properties
Land Improvement
Machineries
Useful life
15 years
10 years
8 years
Method
200% declining balance
Sum-of-the-years digit
Straight line
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