Based on property tax assessments, which are believed to fairly represent values involved, the building is worth thrice as much as the land. The machinery was subject to a 2% cash discount
Problem No. 7
Use the following information for the next three (3) questions:
During your audit of AACA Company, you have identified several transactions by the client related to its fixed assets acquisitions below. The company used a single account, Property and equipment, to record the transactions:
Property and equipment
|
Acquisition price of land and building |
P960,000 |
|
Options taken out on several pieces of property |
16,000 |
|
List price of machinery purchased |
318,400 |
|
Freight on machinery purchased including insurance of P1,000 |
4,000 |
|
Repair to machinery resulting from damage during shipment |
1,480 |
|
Cost of removing old machinery |
4,500 |
|
Driveways and sidewalks |
102,000 |
|
Building remodeling |
400,000 |
|
Utilities paid since acquisition of building |
20,800 |
|
|
P1,827,180 |
Based on property tax assessments, which are believed to fairly represent values involved, the building is worth thrice as much as the land. The machinery was subject to a 2% cash discount, which was taken and credited to Purchases Discounts. Of the two options, P6,000 is related to the building and land purchased and P10,000 related to those not purchased. The old machinery was sold at book value.
Based on the given information and the result of your audit, determine the adjusted balance of the following:
1. Land
2. Building
3. Machinery
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