2018

LAND AND
BUILDING

CRISTINA O. JUMAWAN, CPA, MBA

OBJECTTIVES

• To know the proper statement classification of land.

• To identify the costs normally included in land account.
• To know the treatment of issues related to land, such as land improve
ments, special assessments and real property taxes.
• To identify the costs normally charged to building when purchased and
when constructed.
• To know the treatment of issues related to building, such as sidewalks,
pavements, parking lot, driveways, ventilating system and elevator.
#1 STATEMENT CLASSIFICATION OF LAND

Property, Plant and Equipment Investment Property

If used as plant site  If held for a currently
held definitely for a future pla undetermined use
nt site  If held for long-term capital
Owner-occupied property appreciation

Inventory
 If held for current sale
 #2 COSTS CHARGEABLE TO LAND

Purchase Legal Fees Broker or agent

Price (clean title) Commission
Escrow Fees Fees for Registration Cost of relocation or
and Transfer of Title reconstruction of property
(in order to acquire possession)

Mortgages, Unpaid taxes

encumbrances (up to date of
and interest acquisition) Cost of Survey

Payments to tenants Cost of permanent Cost of option to buy

improvements
#3 LAND IMPROVEMENTS

 If not subject to deprec

iation, charged to LAN
D ACCOUNT
 If depreciable, charged
to LAND IMPROVEM
ENTS
 Land Improvements ar
e depreciated through
its USEFUL LIFE
TITLE

Text
CONTENTS

01
Text
 #3 TREATMENT OF ISSUES RELATED TO LAND

Special
Real Property Taxes
Assessments

Taxes paid by the landowner as General Treatment: Outright Expense

a contribution to the cost of
public improvements.
Treated as part of the cost of
the LAND.
If unpaid real property taxes are assumed
by the buyer in acquiring land, the taxes
shall be accounted as part of the cost of
the LAND but only up to the date of
acquisition.
#4 COSTS NORMALLY CHARGED TO BUILDING

Purchased Constructed

Please refer on page 708 Please refer on page 709

#5 TREATMENT OF ISSUES RELATED TO BUILDING

Building Land Improvements

If part of the blueprint of the If occasionally made or

for the construction of the new incurred not in connection with
building. the construction of the new
building.
#5 TREATMENT OF ISSUES RELATED TO BUILDING

Building Outright Expense

Insurance taken during the Claims for damages for injuries

construction of the building. sustained during the
construction of the building.
#5 TREATMENT OF ISSUES RELATED TO BUILDING

Furniture and
Building Fixtures

Immovable fixtures attached If such expenditures are

to the building in such a movable and depreciated over
manner that the removal of their useful life.
thereof may destroy the
building.
#5 TREATMENT OF ISSUES RELATED TO BUILDING

Building
Building Improvements

If installed during If not, these are charged to

construction, the ventilating building improvements and
system, lighting system and depreciated over their useful
elevator are charged to the life or remaining life of the
building account. building whichever is shorter.
0 ACTIVITY
Please answer the following:

1
28-1Bastard Company

28-3 Dauntless Company

28-7Facetious Company

28-9Melancholy Company