Machinery 510,000.

00
Input VAT 60,000.00
Loss on disposal -old machin 50,000.00
Insurance expense 3,000.00
Accounts Payable 490,000.00
Cash 133,000.00

Land 2,000,000.00
Building 3,500,000.00
Share capital 5,000,000.00
Share premium 500,000.00

Land 2,250,000.00
Building 6,750,000.00
Share capital 6,000,000.00
Share premium 3,000,000.00

Equipment 1,000,000.00
Donated Capital 1,000,000.00

Donated Capital 1,000,000.00

Cash 1,000,000.00

Equipment 580,000.00
Discount on note payable 120,000.00
Note payable 500,000.00
Cash 200,000.00

Discount on payable 166,020.00

Machinery 733,980.00
Note payable 800,000.00
Cash 100,000.00

Computer 430,000.00
Cash 50,000.00
Inventory 300,000.00
Gain on exchange 80,000.00
At the beginning of the current year, ABC Company purchased for P5,000,000 a tract of
land for future site. An existing building on the property, having P250,000 fair value, was
razed and construction began on new factory building which was completed at year-end.
Cost of razing old building 300,000
Proceeds from sale of salvaged materials 20,000
Title insurance and legal fees to purchase land 200,000
Architect fee 950,000
Survey before construction 100,000
Building permit 150,000
Excavation before construction 210,000
Insurance obtained during construction 110,000
New fence surrounding the building 120,000
Driveway, parking bay and safety lighting, part of building’s blueprint 550,000
Cost of trees, shrubs and other landscaping 300,000
Cost of lighting and signage on the building 100,000
Payment to tenants to vacate the building 50,000
Assessment by city for drainage project 10,000
Cost of grading and leveling 45,000
Temporary quarters for construction crew 80,000
Cost of changes during construction to make new building more energy efficient 50,000
Cost of windows broken by vandals 25,000
Cost of open house party to celebrate opening of building 90,000
Materials and supplies for construction 3,000,000
Interest on borrowings to finance construction 120,000
Supervision by management during construction 70,000
Paving of streets and sidewalks 40,000
Labor on construction 2,500,000
Saving on construction 100,000
Cash discounts on materials purchased 55,000

What is the cost of land?

ABC Company is installing new sets of equipment at the production facility and incurred
the following costs:
Cost of equipment A per supplier’s invoice 2,500,000
Initial delivery and handling cost 250,000
Cost of site preparation 120,000
Consultancy fees for an advice on the acquisition of equipment 700,000
Interest charges paid to supplier for deferred credit 10,000
Estimated dismantling cost as required by the contract 200,000
Labor cost of installation by expert fitter 50,000
Labor cost of testing equipment 20,000
Proceeds from sale of sample items produced during testing 5,000
Insurance cost for the current year 15,000
Cost of removing old equipment 30,000
Invoice Cost of equipment B – terms 5/10, n/30 1,500,000
Cost of repairing damage to equipment B caused when equipment was dropped during
90,000
installation
Safety device or platforms added to the equipment 200,000
General overhaul and repairs to recondition machine prior to use 150,000
Cost of training workers to operate the machine 60,000

What total amount should be capitalized in equipment?

 Land 4,750,000
New building
New building - minus
Land
New Building
Land
New Building
New Building
New Building
Land Improvements
New Building
Land Improvements
Building Improvement
New Building
Land
Land
New Building
New Building
Expense
Expense
New Building
New Building
New Building
Land Improvements
New Building
Ignored
New Building - minus

capitalized
capitalized
capitalized
capitalized
expensed
capitalized
capitalized
capitalized
profit
expensed
expensed
1425000 capitalized

expensed
capitalized
capitalized
expensed