Reference no: EM132772473

The Mall Corporation had the following items recorded in its property and equipment account as at December 31, 2018:

Items Debited to the account:

Cash paid to purchase a land with a dilapidated building at the beginning of the year  660,000

Mortgage assumed on the land purchased                       240,000

Commission paid to real estate agent                             150,000

Attorney's fee in connection with this acquisition above       75,000

Cost of razing the old structure                                     120,000

Grading, leveling, and landscaping costs (Permanent improvement)  50,000

Special assessment by for public improvement                              25,000

Interest on loan for construction of a new building (based on average costs incurred)  81,000

Building construction labor costs           800,000

Building construction materials                672,000

Cost of temporary fencing the property during the construction   28,000

Cost of permanent fencing        86,000

Architect's fees                      112,500

Cost of paving driveway and parking lot           70,000

Excavation expenses, including a P90,000 cost of excavation equipment  135,000

Fixed overhead charged to the building                  300,000

Cost of temporary quarters for construction crew     150,000

Cost of temporary building to house tools and materials  90,000

Insurance on building during construction                    31,500

Profit on construction, as the difference between the appraised value of the asset after construction and actual cost incurred  360,000

Payments made to construction workers injured during the construction not covered by insurance      90,000

Payment to tenants of the old building to vacate the premises    90,000

Modification of building ordered by building inspectors               225,000

Property taxes on land covering the period 2015-2018              240,000

Interest that would have been earned had the money used during the period of construction been invested in the money market 150,000

Invoice cost of machinery acquired      381,000

Freight, unloading, and delivery charges  22,500

Allowances, hotel accommodation etc. paid to foreign technicians during the installation and test runs of machines  20,000

Royalty payment on machines purchased (units produced)  75,000

Items Credited to the account

Salvage proceeds from demolished building  15,000

Proceeds from sale of the excavation equipment 30,000

Proceeds from sale of produce of the machinery test runes 3,500

In addition, you discovered that compensation for the worker's injury was necessary because it was not covered by the insurance policy purchased by the company. Accident insurance that would have covered the same would have cost P20,000. The modifications ordered by the building inspectors resulted from poor planning by the company.

Problem 1: Cost of Land is:

a. 1,380,000 c. 2,565,000

b. 2,375,000 d. 1,470,000

Problem 2: Cost of building is:

a. 2,365,000 c. 2,965,000

b. 2,565,000 d. 1,825,000

Problem 3: Cost of Land improvement is:

a. 426,000 c., 156,000

b. 196,000 d. 420,000

Problem 4: Cost of machinery and equipment is:

a. 450,000 c. 492,000

b. 410,000 d. 420,000

Problem 5: the amount should be expensed in 2018:

a. 450,000 c. 492,000

b. 410,000 d. 420,000