Knockout Company was incorporated on January 1, 2022 but began activities on July 1, 2022. The land and building account on December 31, 2022 revealed the following: January February 28 1 May May June 31 Purchase of land and an old, dilapidated building Cost of removal of old building Partial payment on new construction Legal fees paid Second payment on new construction Insurance premium July 1 1 1 1 30 General expenses 1 Final payment on new construction Special tax assessment P 1,600,000 90,000 700,000 50,000 400,000 480,000 a. Cost of land b. Cost of building 60,000 320,000 900,000 • To acquire the land and building, the entity paid P800,000 cash and issued 8,000 preference shares with par value of P100 and fair value of P150. • Legal fees composed of organization cost of P15,000, title examination of land purchased of P10,000, and legal work of P25,000 in connection with construction contract. • Insurance premium covered the building for a two-year term beginning May 1, 2022. • The special tax assessment was for street improvements that are permanent in nature. • Savings on construction amounted to P100,000. Compute for the:

Knockout Company was incorporated on January 1, 2022 but began activities on July 1, 2022. The land and building account on December 31, 2022 revealed the following: January February 28 1 May May June 31 Purchase of land and an old, dilapidated building Cost of removal of old building Partial payment on new construction Legal fees paid Second payment on new construction Insurance premium July 1 1 1 1 30 General expenses 1 Final payment on new construction Special tax assessment P 1,600,000 90,000 700,000 50,000 400,000 480,000 a. Cost of land b. Cost of building 60,000 320,000 900,000 • To acquire the land and building, the entity paid P800,000 cash and issued 8,000 preference shares with par value of P100 and fair value of P150. • Legal fees composed of organization cost of P15,000, title examination of land purchased of P10,000, and legal work of P25,000 in connection with construction contract. • Insurance premium covered the building for a two-year term beginning May 1, 2022. • The special tax assessment was for street improvements that are permanent in nature. • Savings on construction amounted to P100,000. Compute for the:

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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