Reference no: EM132933006
Questions -
Q1) Light Company purchases a landed property named Colorpop at a cost of P120,000,000. In the sale and purchase agreement, P30,000,000 of the purchase price is attributed to the land portion. The building consists of 15 floors of equal space. Three floors of Colorpop will be used for administrative purposes and the balance are let out to tenants. Light also incurs the following costs in connection with the purchase of the property:
Broker fees, P3,000,000;
Legal and registration fees, P2,000,000;
Soft launching cost to market for tenants, P1,0000,000;
Administrative expenses, P500,000.
At what amount should the investment property be initially recognized?
a. P95,000,000
b. P100,000,000
c. P90,000,000
d. P101,200,000
Q2) Cy Company purchased an investment property on October 15, 2021. Cy gave the following as payment for the investment property: P3,000,000 cash; P2,000,000, 12%, one-year note dated October 15, 2021; and machinery with a carrying amount of P250,000 but was given a trade-in allowance of P175,000. The present value factor of P1 for 1 period at 12% is 0.89.
What is the initial cost of investment property?
a. P5,030,000
b. P4,955,000
c. P5,250,000
d. P5,175,000
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