On February 1, 20X1, ABC Corporation purchased a parcel of land as a factory site (unusable) for P320,000. An old building on the property was demolished and construction has begun on a new warehouse that was completed April 15, 20X2. Costs incurred on the construction project are listed below. Demolition of old building - P 21,000; Architect's fees - 31,700; Legal fees--title investigation - 4,100; Construction costs - 950,000; Imputed interest based on stock financing - 14,000; Landfill for building site - 19,300; Clearing of trees from building site - 9,600; Temporary buildings used for construction activities - 29,000; Land survey - 4,000; Excavation for basement - 13,200; Salvage materials from demolition sold for - P1,800; Timber sold for P3,300. Determine the cost of the land
On February 1, 20X1, ABC Corporation purchased a parcel of land as a factory site (unusable) for P320,000. An old building on the property was demolished and construction has begun on a new warehouse that was completed April 15, 20X2. Costs incurred on the construction project are listed below. Demolition of old building - P 21,000; Architect's fees - 31,700; Legal fees--title investigation - 4,100; Construction costs - 950,000; Imputed interest based on stock financing - 14,000; Landfill for building site - 19,300; Clearing of trees from building site - 9,600; Temporary buildings used for construction activities - 29,000; Land survey - 4,000; Excavation for basement - 13,200; Salvage materials from demolition sold for - P1,800; Timber sold for P3,300. Determine the cost of the land
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Topic Video
Question
- On February 1, 20X1, ABC Corporation purchased a parcel of land as a factory site (unusable) for P320,000. An old building on the property was demolished and construction has begun on a new warehouse that was completed April 15, 20X2. Costs incurred on the construction project are listed below. Demolition of old building - P 21,000; Architect's fees - 31,700; Legal fees--title investigation - 4,100; Construction costs - 950,000; Imputed interest based on stock financing - 14,000; Landfill for building site - 19,300; Clearing of trees from building site - 9,600; Temporary buildings used for construction activities - 29,000; Land survey - 4,000; Excavation for basement - 13,200; Salvage materials from demolition sold for - P1,800; Timber sold for P3,300. Determine the cost of the land
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 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