Reference no: EM133055343

Question - Corp Corporation, an SME, bought land and built a warehouse during 2021. It debited the following related costs to an account Land and Building:

Land purchase P220,000

Demolition of old building P30,000

Legal fees for land acquisition P15,000

Interest on loan for the construction of warehouse (based on the average costs incurred) P29,000

Building construction P530,000

Assessment by city for sewer connection P12,000

Landscaping P35,000

Equipment purchased for excavation P188,000

Fixed overhead charged to building P150,000

Insurance on building during construction P10,000

Profit on construction P120,000

Compensation for injury to construction worker P30,000

Modification to building as ordered by building inspectors P75,000

Property taxes on land paid in 2021 P25,000

The following credits were made to the account:

Salvage from demolished old building P7,000

Sale of excavation equipment 140,000

In addition, your discovered that compensation for the worker's injury was necessary since it was not covered by a particular insurance policy purchased by the company. Accident insurance that would have covered the injury would have cost an additional P3,500. The modifications ordered by the building inspectors resulted from poor planning by the company.

Required - 1. Compute the following:

a. Land

b. Building

c. Equipment

2. Prepare the necessary entries to correct the account.