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.