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Problem 1: Sta. Mesa Company purchased real property for P8,600,000 which included P180,000 of realty tax arrears for prior years. A mortgage of P4,000,000 was assumed by Sta. Mesa Company on the purchase. Twenty percent of the purchase price should be allocated to the land and the balance to the building. In order to make the building suitable for use of Sta. Mesa, remodeling cost had to be incurred in the amount of P900,000. This however, necessitated the demolition of a portion of the building, which result in recovery of salvage material sold for P30,000 cash. Landscaping and parking lot cost the company a total of P320,000, while repairs in the main hall were P45,000. What is the cost of the building?
Option 1: P6330000
Option 2: P1795000
Option 3: P7,750,000
Option 4: P7,5?0,000
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