Reference no: EM132776804

REE Corporation provides you the following information pertain to some expenditures incurred during the year:

(1) Extensive costs incurred, P300,000 in the inauguration and blessing of the building which is the primary place of business of XYZ Corporation

(2) Cost of repairing damage on a glass top of a table which was accidentally dropped upon delivery to the administrative office amounted to P 8,500

(3) Import charges on merchandise purchased at FOB shipping point, P 6,500

(4) Repairs costs on a major part of a machinery, P 20,000 which increased its operating capacity by 20%

(5) Re-arrangement costs of machineries in a production line, P 150,000 which reduced the operating costs of the entity

Problem 1: Of the above-cited expenditures, how much should be capitalized?

Problem 2: How much of the above-cited amounts should be recognized as revenue expenditure?