ABC Company build an item of plant manufacturing division. The costs incurred for the construction of the plant are as follows: Contractors' cost, P20,000,000; Direct materials and labor used in the construction, P8,000,000; Engineering and technical overheads, P2,000,000; Interest costs incurred to finance construction, P1,000,000 and general administrative cost allocated, P1,500,000. Of the direct materials and labor used, P1,500,000 is attributable to cost of inefficiencies caused by labor strike. During the construction of the asset, ABC Company entered into an incidental operation wherein the company uses the vacant plant site as parking lot. Total revenue from the parking lot was P125,000 and related cost incurred was P10,000. At what amount should the manufacturing plant be initially recorded?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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ABC Company build an item of plant manufacturing division. The costs incurred for the construction of the plant are as
follows:
Contractors' cost, P20,000,000; Direct materials and labor used in the construction, P8,000,000; Engineering and
technical overheads, P2,000,000; Interest costs incurred to finance construction, P1,000,000 and general
administrative cost allocated, P1,500,000.
Of the direct materials and labor used, P1,500,000 is attributable to cost of inefficiencies caused by labor strike.
During the construction of the asset, ABC Company entered into an incidental operation wherein the company uses the
vacant plant site as parking lot. Total revenue from the parking lot was P125,000 and related cost incurred was
P10,000. At what amount should the manufacturing plant be initially recorded?
Transcribed Image Text:ABC Company build an item of plant manufacturing division. The costs incurred for the construction of the plant are as follows: Contractors' cost, P20,000,000; Direct materials and labor used in the construction, P8,000,000; Engineering and technical overheads, P2,000,000; Interest costs incurred to finance construction, P1,000,000 and general administrative cost allocated, P1,500,000. Of the direct materials and labor used, P1,500,000 is attributable to cost of inefficiencies caused by labor strike. During the construction of the asset, ABC Company entered into an incidental operation wherein the company uses the vacant plant site as parking lot. Total revenue from the parking lot was P125,000 and related cost incurred was P10,000. At what amount should the manufacturing plant be initially recorded?
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