Find the adjusted ending balance of the building

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Reference no: EM132796256

Question - The Queen Manufacturing Company began operating July 1, 2020, the date they completed all factory facilities in place, but the company was incorporated at the beginning of the year. The Land and Building Account at the end of the first year showed the following items:

DATE PARTICULARS AMOUNT

January 3 Acquisition of Land and Building 1,108,000

January 15 Property Taxes paid on the real property 20,000

February 5 Option Payments 20,000

February 28 Cost of Removal of the old building 22,000

March 1 Partial payment on new construction to induce the start of construction 700,000

March 1 Legal fees paid 15,000

March 1 Insurance Premium paid for I year 24,000

June 1 Second Payment on new construction 600,000

June 30 General Expenses 60,000

July 1 Final Payment of New Construction 200,000

July 1 Construction Gain 500,000

TOTAL 3,269,000

December 31 Depreciation at 1% of the balance (32,690)

Carrying Value 3,236,310

The following notes are relevant to consider:

a. To acquire the land and building, the company paid P 108,000 cash and 10,000 shares of its 10% preference shares with par value of P 100 per share and with a current selling price of P 120 per share.

b. The property taxes paid was for two year, 2019 and 2020.

c. P 15,000 from the total option payments were for the property acquired while the balance were for the other real properties not acquired.

d. Legal fees covered the following: Cost of Incorporation, P 9,500; Examination of the title covering purchase of land, P 4,000; Legal work in connection with the construction contract, P 1,500.

e. General expenses covered the salaries for the period January 1 to June 30 of the following:

President P 20,000

Plant Superintendent while supervising the construction 12,000

Office Staff 28,000

f. The gain on construction is the difference between the total cost of construction and the fair value of the asset upon completion.

g. The estimated life of the building is 25 years.

Required - Find the adjusted ending balance of the building?

Reference no: EM132796256

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