Reference no: EM132984606
GREY Company acquired a piece of land with an existing building for a total consideration P1,500,000. GREY Company intends to demolish the existing building and construct a new one. The fair value of the land and existing building at acquisition date were P1,450,000 and P250,000 respectively.
Additional cost incurred in relation to the property is as follows:
Commission fees paid to real estate agent 80,000
Cost of demolishing old building 45,000
Proceeds from salvage of demolished old building 15,000
Cost of land fill and clearing 90,000
Land survey 25,000
Building permit 30,000
Excavation costs 35,000
Temporary quarters for construction crews 15,000
Installation of fences around the property 65,000
Cost of paving the driveways and parking bays 25,000
Interest paid on money borrowed for construction 150,000
Payment for construction of new building 1,200,000
Opening ceremony costs of new building 50,000
Problem 1: Identify the costs to be charged as Land, Land Improvements and Building
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