Health Co. purchased land and building at a lump-sum price of P6,000,000. After the acquisition, Health Co. demolished the existing building and started the construction of a new one. Health Co. incurred P30,000 in razing the old structure.Materials salvaged from the demolition were sold for P7,500. Heatlh incurred the following additional costs: Legal fees in conveying title to land 10,000 Option paid for the land and old building acquired 3,000 Payments to tenants to vacate premises 6,000 Materials, labor and construction overhead incurred in the construction of the new building 4,250,000 Case 1: The land and old building have fair values of P2,500,000 and P5,000,000, respectively. Requirements: Allocate the costs. Provide the journal entries. Case 2: The old building is unusable and has an insignifacant fair value. Requirements: Allocate the costs. Provide the journal entries.
Health Co. purchased land and building at a lump-sum price of P6,000,000. After the acquisition, Health Co. demolished the existing building and started the construction of a new one. Health Co. incurred P30,000 in razing the old structure.Materials salvaged from the demolition were sold for P7,500. Heatlh incurred the following additional costs: Legal fees in conveying title to land 10,000 Option paid for the land and old building acquired 3,000 Payments to tenants to vacate premises 6,000 Materials, labor and construction overhead incurred in the construction of the new building 4,250,000 Case 1: The land and old building have fair values of P2,500,000 and P5,000,000, respectively. Requirements: Allocate the costs. Provide the journal entries. Case 2: The old building is unusable and has an insignifacant fair value. Requirements: Allocate the costs. Provide the journal entries.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Health Co. purchased land and building at a lump-sum price of P6,000,000. After the acquisition, Health Co. demolished the existing building and started the construction of a new one. Health Co. incurred P30,000 in razing the old structure.Materials salvaged from the demolition were sold for P7,500. Heatlh incurred the following additional costs:
Legal fees in conveying title to land 10,000
Option paid for the land and old building acquired 3,000
Payments to tenants to vacate premises 6,000
Materials, labor and construction
in the construction of the new building 4,250,000
Case 1: The land and old building have fair values of P2,500,000 and P5,000,000, respectively.
Requirements:
- Allocate the costs.
- Provide the
journal entries.
Case 2: The old building is unusable and has an insignifacant fair value.
Requirements:
- Allocate the costs.
- Provide the journal entries.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education