MABUTINGEHEMPLO, Inc. obtained a land with an old building, that will be accounted for under property, plant and equipment. The Company intends to demolish the old building, since the old building is already deemed unusable. The following information relates to the land and building: Purchase price of the land and building P3,500,000 Fair value of the land 3,000,000 Historical cost Land 2,000,000 Old building 6,000,000 Demolition costs 700,000 Which of the following statements are true? O The demolition costs would be capitalized as part of land. O The cost of the new building is P17.100,000 million. O The cost of land is deemed to be P3.000.000. OThe amount of expense to be recognized is P700.000. Which is equal to the demolition costs since the old building is already unusable.
MABUTINGEHEMPLO, Inc. obtained a land with an old building, that will be accounted for under property, plant and equipment. The Company intends to demolish the old building, since the old building is already deemed unusable. The following information relates to the land and building: Purchase price of the land and building P3,500,000 Fair value of the land 3,000,000 Historical cost Land 2,000,000 Old building 6,000,000 Demolition costs 700,000 Which of the following statements are true? O The demolition costs would be capitalized as part of land. O The cost of the new building is P17.100,000 million. O The cost of land is deemed to be P3.000.000. OThe amount of expense to be recognized is P700.000. Which is equal to the demolition costs since the old building is already unusable.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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