10/26/22, 7:37 PM [Solved] The Mall Corporation had the following items recorded in its...

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The Mall Corporation had the following items recorded in its...

 The Mall Corporation had the following items recorded  in its property and equipment account as at December 31,  2018: 
Items Debited to the account: 
Cash paid to purchase a land with a dilapidated  building at the beginning of the year
660,000
Mortgage assumed on the land purchased 
240,000
Commission paid to real estate agent 
150,000
Attorney's fee in connection with this acquisition  above
75,000
Cost of razing the old structure 
120,000
Grading, leveling, and landscaping costs (Permanent  improvement)
50,000
Special assessment by for public improvement 
25,000
Interest on loan for construction of a new building  (based on average costs incurred)
81,000
Building construction labor costs 
800,000
Building construction materials 
672,000
Cost of temporary fencing the property during the  construction
28,000
Cost of permanent fencing 
86,000
Architect's fees 
112,500
Cost of paving driveway and parking lot 
70,000
Excavation expenses, including a P90,000 cost of  excavation equipment
135,000
Fixed overhead charged to the building 
300,000
Cost of temporary quarters for construction crew 
150,000
Cost of temporary building to house tools and  materials
90,000
Insurance on building during construction 
31,500
Profit on construction, as the difference between the  appraised value of the asset after construction and  actual cost incurred
360,000
Payments made to construction workers injured  during the construction not covered by insurance
90,000
Payment to tenants of the old building to vacate the  premises
90,000
Modification of building ordered by building  inspectors
225,000
Property taxes on land covering the period 2015-2018 
240,000
Interest that would have been earned had the money  used during the period of construction been invested  in the money market
150,000
Invoice cost of machinery acquired 
381,000
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10/26/22, 7:37 PM [Solved] The Mall Corporation had the following items recorded in its... | Course Hero

Freight, unloading, and delivery charges 

22,500
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Allowances, hotel accommodation etc. paid to foreign  technicians during the installation and test runs of  machines
20,000
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Royalty payment on machines purchased (units produced) 
75,000

Items Credited to the account 

Salvage proceeds from demolished building 
15,000
Proceeds from sale of the excavation equipment 
30,000
Proceeds from sale of produce of the machinery  test runes
3,500

In addition, you discovered that compensation for the worker's  injury was necessary because it was not covered by the insurance 
policy purchased by the company. Accident insurance that would  have covered the same would have cost P20,000. The modifications 
ordered by the building inspectors resulted from poor planning by  the company. 

11. Cost of Land is: 

a. 1,380,000 c. 2,565,000  b. 2,375,000 d. 1,470,000 
12. Cost of building is: 
a. 2,365,000 c. 2,965,000 b. 2,565,000 d. 1,825,000 
13 Cost of Land improvement is: 
a. 426,000 c., 156,000 b. 196,000 d. 420,000 
14. Cost of machinery and equipment is: 
a. 450,000 c. 492,000  b. 410,000 d. 420,000 
15. the amount should be expensed in 2018: 
a. 450,000 c. 492,000  b. 410,000 d. 420,000 

Accounting Business Financial Accounting 섈 쉋

Answer & Explanation Solved by verified expert 숨

1. 1,380,000

2. 2,565,000

3. 156,000

4. 420,000

5. 450,000

Step-by-step explanation

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10/26/22, 7:37 PM [Solved] The Mall Corporation had the following items recorded in its... | Course Hero

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Image transcription text

Land lm rovement Machiner andE ui meI Ex ense Mortgage assumed on the land purchased 240.000

Commission paid to real estate agent 150.000 Attorney's Fee in connection with this acquisition

above ?5.000 Cost oF razing the old structure 120.000 Grading. leveling. and landscapi... Show more

Note:
Cost of razing the old structure - chargeable to Land if there is NO NEW BUILDING
Permanent improvement - chargeable to Land
Not permanent improvement - chargeable to Land Improvements
Cost of excavation equipment - if solely used, charge to building. If not, charge to equipment.
Property taxes on land - 2015 to 2017: not yet the owner
Interest that would have been earned - irrelevant, this is an opportunity cost.

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