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Question 2 Kimono Bhd purchased a piece of land and a building near the Menara Kuala Lumpur for RM20 million. Apart from the purchase price, Kimono Bhd has inccured the following expenditures in relation to the purchase of the land and building: Legal fees to draft the contract RM6,000 Title insurance RM12,000 Property taxes for the period after acquisition (pro-rated) RM25,000 Municipal Council transfer fees RM7,000 On the other hand, the company hired a professional independent valuer to revalue the land and building. After revaluation process, the valuer stated that the land value is approximately RM 2.2 million while the building is RM1.1 million if the company purchased separately. Not long after acquistion, Kimono Berhad spent RM170,000 to build a parking lot and another RM35,000 for its interior design.

Question 2 Kimono Bhd purchased a piece of land and a building near the Menara Kuala Lumpur for RM20 million. Apart from the purchase price, Kimono Bhd has inccured the following expenditures in relation to the purchase of the land and building: Legal fees to draft the contract RM6,000 Title insurance RM12,000 Property taxes for the period after acquisition (pro-rated) RM25,000 Municipal Council transfer fees RM7,000 On the other hand, the company hired a professional independent valuer to revalue the land and building. After revaluation process, the valuer stated that the land value is approximately RM 2.2 million while the building is RM1.1 million if the company purchased separately. Not long after acquistion, Kimono Berhad spent RM170,000 to build a parking lot and another RM35,000 for its interior design.

FINANCIAL ACCOUNTING
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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Question 2 Kimono Bhd purchased a piece of land and a building near the Menara Kuala Lumpur for RM20 million. Apart from the purchase price, Kimono Bhd has inccured the following expenditures in relation to the purchase of the land and building: Legal fees to draft the contract RM6,000 Title insurance RM12,000 Property taxes for the period after acquisition (pro-rated) RM25,000 Municipal Council transfer fees RM7,000 On the other hand, the company hired a professional independent valuer to revalue the land and building. After revaluation process, the valuer stated that the land value is approximately RM 2.2 million while the building is RM1.1 million if the company purchased separately. Not long after acquistion, Kimono Berhad spent RM170,000 to build a parking lot and another RM35,000 for its interior design. Required: a) Determine the initial measurement of land and building, separately. b) As above, but this time, assume that soon after acquisition, Kimono Bhd demolished the building at the cost of RM42,000 and the scrapped materials were sold for RM8,000 cash. Apart from this cost, Kimono Bhd also incurred another RM73,000 for clearing and restoring the land in preparation for the construction of the new building. c) Explain the rationale to your answers in part (a) and (b) by referring to the specific requirements of MFRS 116, where necessary.
Transcribed Image Text:Question 2 Kimono Bhd purchased a piece of land and a building near the Menara Kuala Lumpur for RM20 million. Apart from the purchase price, Kimono Bhd has inccured the following expenditures in relation to the purchase of the land and building: Legal fees to draft the contract RM6,000 Title insurance RM12,000 Property taxes for the period after acquisition (pro-rated) RM25,000 Municipal Council transfer fees RM7,000 On the other hand, the company hired a professional independent valuer to revalue the land and building. After revaluation process, the valuer stated that the land value is approximately RM 2.2 million while the building is RM1.1 million if the company purchased separately. Not long after acquistion, Kimono Berhad spent RM170,000 to build a parking lot and another RM35,000 for its interior design. Required: a) Determine the initial measurement of land and building, separately. b) As above, but this time, assume that soon after acquisition, Kimono Bhd demolished the building at the cost of RM42,000 and the scrapped materials were sold for RM8,000 cash. Apart from this cost, Kimono Bhd also incurred another RM73,000 for clearing and restoring the land in preparation for the construction of the new building. c) Explain the rationale to your answers in part (a) and (b) by referring to the specific requirements of MFRS 116, where necessary.
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