The following expenditures were incurred by an entity during 2021. A piece of land with a dilapidated building was acquired and immediately construction of a new building began. Upon completion of the building, the entity acquired several pieces of machinery for use in its operations. Cash paid on purchase of land-P4,500,000 Mortgage assumed on the land bought-P5,000,000 Legal fees and title verification expenses-P50,000 Payment to squatters on the property to vacate the premises -P100,000 Demolition costs incurred-P80,000 Proceeds from sale of salvaged materials-P45,000 Paid to contractor for a building erected-P12,000,000 Building permit fees-P20,000 Excavation expenses-P50,000 Architect’s fees-P150,000 Capitalized interest cost on building constructed-P18,000 What are the costs of Land and Building, respectively? Apply the principles prior to the amendments to PAS 16 that is effective on January 1, 2022.

SWFT Comprehensive Vol 2020
43rd Edition
ISBN:9780357391723
Author:Maloney
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Chapter14: Property Transact Ions: Capital Gains And Losses, § 1231, And Recapture Provisions
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The following expenditures were incurred by an entity during 2021. A piece of land with a dilapidated building was acquired and immediately construction of a new building began. Upon completion of the building, the entity acquired several pieces of machinery for use in its operations.

Cash paid on purchase of land-P4,500,000
Mortgage assumed on the land bought-P5,000,000
Legal fees and title verification expenses-P50,000
Payment to squatters on the property to vacate the premises
-P100,000
Demolition costs incurred-P80,000
Proceeds from sale of salvaged materials-P45,000
Paid to contractor for a building erected-P12,000,000
Building permit fees-P20,000
Excavation expenses-P50,000
Architect’s fees-P150,000
Capitalized interest cost on building constructed-P18,000

What are the costs of Land and Building, respectively? Apply the principles prior to the amendments to PAS 16 that is effective on January 1, 2022.
 
 
a. 9,685,000 and 12,238,000
b. 9,650,000 and 12,273,000
c. 9,550,000 and 12,418,000
d. 9,550,000 and 12,373,000
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