a. If Elixir Company was able to sell all the lots except for 15 lots of Class C, how much is the cost of sales to be recognized for the year?b. What amount should be allocated as total cost of Class B lots under the Relative Sales Price method? Elixir Company bought a 10-hectare land in Novaliches to be improved, subdivided into lotsand eventually sold. Purchase price of the land was P5,800,000. Taxes and documentationexpenses on the transfer of the property amounted to P80,000. The lots were classified asfollows:Selling price per lot100,00080,00070,00060,000Number of lotsTotal clearing costNoneLot classA10100,000300,000800,000В20C40D50

Capital asset: Capital asset can be defined as the asset having useful life of more than one year…

a. If Elixir Company was able to sell all the lots except for 15 lots of Class C, how much is the cost of sales to be recognized for the year? b. What amount should be allocated as total cost of Class B lots under the Relative Sales Price method?

a. If Elixir Company was able to sell all the lots except for 15 lots of Class C, how much is the cost of sales to be recognized for the year? b. What amount should be allocated as total cost of Class B lots under the Relative Sales Price method?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

a. If Elixir Company was able to sell all the lots except for 15 lots of Class C, how much is the cost of sales to be recognized for the year?

b. What amount should be allocated as total cost of Class B lots under the Relative Sales Price method?

Elixir Company bought a 10-hectare land in Novaliches to be improved, subdivided into lots
and eventually sold. Purchase price of the land was P5,800,000. Taxes and documentation
expenses on the transfer of the property amounted to P80,000. The lots were classified as
follows:
Selling price per lot
100,000
80,000
70,000
60,000
Number of lots
Total clearing cost
None
Lot class
A
10
100,000
300,000
800,000
В
20
C
40
D
50

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