Reference no: EM132788093
Company A provided you the following transaction pertaining to the different acquisitions of newly acquired Property Plant and Equipment for the year 2019:
A. On January 1, 2019, Verdana Company purchased several office machineries that will be used in the production of goods at a purchase price of Php 1,000,000. Company A paid import duties of Php 10,000 and non-refundable purchase taxes of Php 5,000.
- Company A also incurred a Php 30,000 installation cost. The company expects that it will incur dismantling cost amounting to Php 132,275 at the end of its 5-year useful life.
- The prevailing market interest rate during the transaction date was 12%. The present value factor of 1 at 12% for 5 periods is 0.567.
- The present value factor of ordinary annuity at 12% for 5 periods is at 3.605
B. On May 1, Company A issued 300,000 shares for a factory machine having a fair value of Php 5,000,000 on the date of acquisition.
- The par value per share is Php 10 and the fair value per share on December 21, 2019 is Php 3.605.
C. Company A owns a tract of land which it purchased in 2016 for Php 1,000,000. The land is held as a plant site and has a fair market value of Php 1,500,000 on July 1, 2019
- On this date company A exchanged its land for a new land and paid Php 500,000 cash. The expected cash flows from the asset transferred and the difference is significant relative to the fair value of the land given up.
D. Various furniture and fixtures were acquired at the beginning of 2019 from a single supplier with the following terms of payments:
Down payment - 1,300,000
3year non-interest bearing note- 2,400,000
10,000 shares at par Php 50 - 300,000
- It was ascertained that the total cash price of the various furniture and fixtures was at Php 3,500,000.
E. Company A constructed its own factory building. The company had a Php 2,000,000 one-year 12% loan specifically obtained to finance the asset construction.
The construction began on August 1, 2019 and the building was completed on December 31, 2019. Expenditures on the building were made as follows
August 1 - 400,000
September 30 - 1,000,000
November 1 - 1,000,000
December 31, 400,000
Problem 1. How much is the total initial cost of Machineries?
Problem 2. How much is the initial cost of the new land?
Problem 3. How much is the initial cost of the Furniture and Fixtures?
Problem 4. How much is the initial cost of the self-constructed building?