Professional Documents
Culture Documents
Manila
2. An entity purchased a tract of land as a factory site. An old building was demolished and
construction began on the new building.
Purchase price of land and an old building to be demolished 4,500,000
Fair value of old building 250,000
Cost of demolishing old building 300,000
Title insurance and legal fees to purchase land 200,000
Architect fee 950,000
New building construction cost 8,000,000
Survey before construction 100,000
Building permit or payment to city hall for approval of building construction 150,000
Excavation before new construction 200,000
Landfill for building site 150,000
Liability insurance during construction 100,000
New fence surrounding the new building 100,000
Driveway, parking bay and safety lighting 550,000
Cost of trees, shrubs and other landscaping 300,000
1. What is the cost of the land?
a. 4,700,000
b. 4,800,000
c. 4,850,000
d. 4,450,000
3. An entity purchased land as factory site and contracted with a contractor to construct a factory. The
entity made the following expenditures related to the acquisition of the land, building and
machinery:
Purchase price of the land 1,200,000
Demolition and removal of old building 80,000
Clearing and grading the land before construction 150,000
Various closing costs in connection with acquiring the land 40,000
Architect fee for the plans for the new building 50,000
Payment to contractor for building construction 3,250,000
Machinery purchased 850,000
Freight charge on machinery 30,000
Trees, plants and other landscaping 45,000
Installation of sprinkler system for the landscaping 5,000
Cost to build special platform and install wiring for the machinery 10,000
Cost of trial runs to ensure proper installation of the machinery 20,000
Fire and theft insurance on the factory for the first year of use 60,000
1. What is the cost of the land?
a. 1,390,000
b. 1,470,000
c. 1,440,000
d. 1,550,000
2. What is the cost of the building?
a. 3,300,000
b. 3,380,000
c. 3,450,000
d. 3,530,000
3. What is the cost of machinery?
a. 970,000
b. 900,000
c. 910,000
d. 960,000
END 6905