Reference no: EM133187064
Question - On January 1, 2021, Uwu Company acquired property consisting of ten identical freehold detached houses each with separate legal title including the land on which it is built for P200,000,000, 20% of which is attributable to the land. The units have a useful life of 50 years.
The following costs are also incurred on such date:
Non refundable purchase taxes not included in the purchase price, 20,000,000
Legal cost directly attributable to the acquisition, 900,000
Reimbursement to the previous owner for prepaying nonrefundable property taxes for the six-month period ending June 30, 2021, 100,000
Advertising campaign, 500,000
Opening function to celebrate new rental business, 200,000
On June 30, 2021, the entity paid local property taxes of P200,000 for the year ending June 30, 2022.
Throughout 2021, the entity incurred repairs and maintenance of P120,000.
The entity used one of the ten units to accommodate the administration and maintenance staff. The other nine units are rented out to independent parties under an operating lease.
On December 31, 2021, the fair value of each unit was reliably estimated at P25,000,000. The fair value of the units can be measured reliably. The accounting policy is to use the fair value model for investment property.
1. What amount should be reported initially as investment property?
a. 198,900,000
b. 198,810,000
c. 198,000,000
d. 180,000,000
2. Using the same information in the preceding number, what amount should be reported initially as land to be accounted for as property, plant and equipment?
a. 4,420,000
b. 4,400,000
c. 4,430,000
d. 4,418,000
3. What amount should be reported initially as building to be accounted for as property, plant and equipment?
a. 17,680,000
b. 17,690,000
c. 16,000,000
d. 17,672,000