During the year 2020, Akasia Maju Bhd (AMB) purchased a piece of land with an existing building for RM1,125,000. The land was valued at RM1,050,000 and the building at RM75,000. AMB demolished the building and constructed a new building as headquarters on the site. The new building and land improvement are expected to last for 80 years with no residual value and the construction was fully completed by the end of the year 2020. The following represents the various items related to the project in year 2020: Items RM Lawyer’s fee to close the purchase deal 22,500 Cost of land fill and clearing 18,000 Architect’s fee 120,000 Fencing around the land 60,000 Cost of demolishing existing building 97,500 Interest on financing of construction paid during construction 282,000 Receipts from sale of demolition scraps 15,000 Construction costs 1,200,000 Landscaping (trees and shrubs) 30,000 Parking lots and concrete walks on the property 180,000 Insurance premium during construction period 18,000 Moving costs from old headquarters to new headquarters 150,000 To accommodate the mission of improving productivity and efficiency, the company also bought a new special equipment and made the following payments. Items RM Manufacturer’s list price 4,303,500 Trade discount 37,500 Delivery charge 75,000 Installation charge 50,250 Additional components to increase capacity 107,250 Service and maintenance 24,750 Replacement parts 17,000 Test runs 16,500 Small spare parts 2,600 REQUIRED: Calculate the cost of land, land improvement, building, and equipment based on MFRS 116 Property, Plant, and Equipment. Please show your calculations.
During the year 2020, Akasia Maju Bhd (AMB) purchased a piece of land with an existing building for RM1,125,000. The land was valued at RM1,050,000 and the building at RM75,000. AMB demolished the building and constructed a new building as headquarters on the site. The new building and land improvement are expected to last for 80 years with no residual value and the construction was fully completed by the end of the year 2020.
The following represents the various items related to the project in year 2020:
|
Items |
RM |
|
Lawyer’s fee to close the purchase deal |
22,500 |
|
Cost of land fill and clearing |
18,000 |
|
Architect’s fee |
120,000 |
|
Fencing around the land |
60,000 |
|
Cost of demolishing existing building |
97,500 |
|
Interest on financing of construction paid during construction |
282,000 |
|
Receipts from sale of demolition scraps |
15,000 |
|
Construction costs |
1,200,000 |
|
Landscaping (trees and shrubs) |
30,000 |
|
Parking lots and concrete walks on the property |
180,000 |
|
Insurance premium during construction period |
18,000 |
|
Moving costs from old headquarters to new headquarters |
150,000 |
To accommodate the mission of improving productivity and efficiency, the company also bought a new special equipment and made the following payments.
|
Items |
RM |
|
Manufacturer’s list price |
4,303,500 |
|
Trade discount |
37,500 |
|
Delivery charge |
75,000 |
|
Installation charge |
50,250 |
|
Additional components to increase capacity |
107,250 |
|
Service and maintenance |
24,750 |
|
Replacement parts |
17,000 |
|
Test runs |
16,500 |
|
Small spare parts |
2,600 |
REQUIRED:
Calculate the cost of land, land improvement, building, and equipment based on MFRS 116 Property, Plant, and Equipment. Please show your calculations.
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