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?

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

Section: Chapter Questions

Problem 1Q

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