Reference no: EM132934800

Questions -

Q1) BK Company purchases a landed property named Burger King at a cost of P120,000,000. In the sale and purchase agreement, P30,000,000 of the purchase price is attributed to the land portion. The building consists of 15 floors of equal space. Three floors of Burger King will be used for and the balance are let out to tenants. BK also incurs the following administrative purposes costs in connection with the purchase of the property: Broker fees, P3,000,000; Legal and registration fees, P2,000,000; Soft launching cost to market for tenants, P1,0000,000; and administrative expenses, P500,000. At what amount should the investment property be initially recognized?

A. P90,000,000

B. P95,000,000

C. P101,200,000

D. P100,000,000

Q2) On January 1, 2020, M&M Company had capitalized cost of P15,000,000 for a new computer software product with an economic life of 5 years. Sales for 2020 for the software product amounted to P5,000,000. The total sales of the software over its economic life are expected to be P20,000,000. However, the pattern of future sales from the computer software cannot be determined reliably. In its 2020 income statement, M&M should record the amortization of computer software at

A. P0

B. P3,000,000

C. P3,750,000

D. P2,000,000