Reference no: EM133065553

QUESTION 1 - On January 1, 2020, Lemonon Company acquired land held for investment.

In relation, the entity incurred and paid the following:

Acquisition cost P3,000,000

Transfer taxes 215,900

Other administration cost 102,700

Legal fees 175,300

At year- end, the fair value of the land held for investment is P3, 650,000.

Under the fair value model, how much is the gain reported in the income statement?

QUESTION 2 - At the beginning of the current year, Paraguay Company purchased a mineral oil amounting to P10,000,000 with removable ore estimated at 800,000 tons.

After it has extracted all the ore, the entity will be required by the law to restore the land to the original condition at an estimated fair value of P3,000,5000.

The entity believed it will be to sell property afterward for P895,000.

During the current year, the entity incurred P 3,494,500 of development costs preparing the mine for production and removed 120,000 tons, and sold 100,000 tons of ore.

What amount should be reported as depletion for the current year?

QUESTION 3 - On January 1, 2020, Tekla Company signed an agreement to operate as a franchise.

Initial franchise fee P3,600,000

Annual payment at the end of each year for 5 periods 720,000

Effective rate 16%

Franchise term. 5 years

Estimated useful life 10 years

The entity used 2 decimal places for the PV factor.

What is the interest expense incurred on December 31, 2021.

QUESTION 4 - V Company and its subsidiaries own the following properties:

1. A vacant building owned by the parent and to be leased out under an operating lease of P1,800,900.

2. Land held by the parent for undetermined use of P2,985,700.

3. Land held for future factory site P 3,982,520.

4. Land leased out to an unrelated party under a finance lease of P1,500,000.

5. Machinery leased out by the parent to an unrelated party under an operating lease of P1,000,000.

6. Property held by subsidiary, a food processing firm, P2,000,000.

7. Property held by the parent for use in the production of 4,000,000.

8. Property leased in under finance lease P4,550,250.

9. Property under construction for use as investment property of P2,000,500.

How much is the investment property?