Rover Company started operations on January 1, 2022. During the year, the company incurred the following: Contract price for new building P 9,600,000 New permanent 190,000 700,000 400,000 200,000 160,000 Driveways and parking bays Saving on construction Taxes in arrears assumed by Vanguard Safety inspection on new building Service equipment made as permanent part of the building Excavation cost Architect fee Payment to city hall for approval of building construction Removal of safety fence after completion of new building Cost of changes to plans and specifications due to incompetence Safe fence around construction site Payment for land Compute for the cost of Land. O P2,400,000 O P2,300,000 P2,100,000 P2,200,000 2,100,000 300,000 560,000 340,000 140,000 320,000 170,000 2,100,000

Rover Company started operations on January 1, 2022. During the year, the company incurred the following: Contract price for new building P 9,600,000 New permanent 190,000 700,000 400,000 200,000 160,000 Driveways and parking bays Saving on construction Taxes in arrears assumed by Vanguard Safety inspection on new building Service equipment made as permanent part of the building Excavation cost Architect fee Payment to city hall for approval of building construction Removal of safety fence after completion of new building Cost of changes to plans and specifications due to incompetence Safe fence around construction site Payment for land Compute for the cost of Land. O P2,400,000 O P2,300,000 P2,100,000 P2,200,000 2,100,000 300,000 560,000 340,000 140,000 320,000 170,000 2,100,000

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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Company A entered into a P4,500,000 fixed-price contract with a contractor on March 1, 2019 for the construction of an office building. The building was completed and occupied on September 30, 2020. Additional construction costs were incurred as follows: Plans, specifications and blueprints 18,000 Architect's fees for design and supervision 142,500 The building is estimated to have a 40-year useful life from the date of completion and will be depreciated using the 150%-declining balance method. To finance the construction cost, the company borrowed P4,500,000 on March 1, 2019. The loan is payable in 10 annual installments of P450,000 plus interest at the rate of 10%. The company used part of the loan proceeds for working capital requirements. The Company's average amounts of accumulated building construction expenditures were as follows: For the period March 1 to December 31, 2019 1,350,000 For the period January 1 to September 31, 2020 3,450,000…
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