What is the cost of land improvements? A. P620,000B. P654,000C. P114,000D. P134,000 What is the cost of the equipment? A. P959,000B. P849,000C. P903,000D. P1,359,000 Loki Company commenced operations on January 1, 2015. During the followingyear, the company acquired a tract of land, demolished the building on the landand built a new factory. Equipment was acquired for the factory and, inSeptember 2016, the plant was ready to commence operation. A gala openingwas held on September 18, with the City Mayor opening the factory. The firstitems were ready for sale on September 25. During this period, the following cashinflows and outflows occurred:While searching for a suitable block of land, Seri placed an option to buy with threereal estate agents at a cost of P1,000 each.Payment of option fees• Receipt of loan from bank• Payment to settlement agent for title search, stamp duties, and settlement fees• Payment of delinquent property taxes assumed by Seri Company• Payment for landPayment for demolition of old building• Proceeds from sale of material from old building• Payment to architect• Payment to City Hall for approval of building construction• Payment for safety fence around construction site• Payment to construction contractor for factory building• Payment for external driveways, parking bays, and safety lighting• Payment of interest on construction loan• Payment for safety inspection on building• Payment for equipmentPayment for freight and insurance costs on delivery of equipment• Payment of installation cost on equipment• Payment for safety equipment surrounding equipment• Payment for removal of safety fence• Payment for new fence surrounding the factory• Payment for advertisements in the newspaper about the forthcoming factory and itsbenefits to the community• Payment for opening ceremonyPayments to adjust equipment to more efficient operating levels subsequent to initialoperationP 3,0003,000,000100,00050,0001,000,000120,00055,000230,000120,00034,0002,400,000540,000400,00030,000640,00056,000120,000110,00020,00080,0005,00060,00033,000

Particulars Amount (P) Payment for external driveways, parking bays, and safety lighting 540000…

Answered: What is the cost of land improvements?…

What is the cost of land improvements? A. P620,000 B. P654,000 C. P114,000 D. P134,000 What is the cost of the equipment? A. P959,000 B. P849,000 C. P903,000 D. P1,359,000

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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Question

What is the cost of land improvements?

A. P620,000

B. P654,000

C. P114,000

D. P134,000

What is the cost of the equipment?

A. P959,000

B. P849,000

C. P903,000

D. P1,359,000

Loki Company commenced operations on January 1, 2015. During the following
year, the company acquired a tract of land, demolished the building on the land
and built a new factory. Equipment was acquired for the factory and, in
September 2016, the plant was ready to commence operation. A gala opening
was held on September 18, with the City Mayor opening the factory. The first
items were ready for sale on September 25. During this period, the following cash
inflows and outflows occurred:
While searching for a suitable block of land, Seri placed an option to buy with three
real estate agents at a cost of P1,000 each.
Payment of option fees
• Receipt of loan from bank
• Payment to settlement agent for title search, stamp duties, and settlement fees
• Payment of delinquent property taxes assumed by Seri Company
• Payment for land
Payment for demolition of old building
• Proceeds from sale of material from old building
• Payment to architect
• Payment to City Hall for approval of building construction
• Payment for safety fence around construction site
• Payment to construction contractor for factory building
• Payment for external driveways, parking bays, and safety lighting
• Payment of interest on construction loan
• Payment for safety inspection on building
• Payment for equipment
Payment for freight and insurance costs on delivery of equipment
• Payment of installation cost on equipment
• Payment for safety equipment surrounding equipment
• Payment for removal of safety fence
• Payment for new fence surrounding the factory
• Payment for advertisements in the newspaper about the forthcoming factory and its
benefits to the community
• Payment for opening ceremony
Payments to adjust equipment to more efficient operating levels subsequent to initial
operation
P 3,000
3,000,000
100,000
50,000
1,000,000
120,000
55,000
230,000
120,000
34,000
2,400,000
540,000
400,000
30,000
640,000
56,000
120,000
110,000
20,000
80,000
5,000
60,000
33,000

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