Reference no: EM132981934

Problem - At the beginning of the current year, EZE Company reported land P3,200,000 and building P7,500,000. During the current year, the following transactions occurred:

A piece of land was acquired for P1,600,000. To be able to acquire the land, P200,000 was paid to a real estate agent, and P100,000 was incurred to clear the land. During the course of clearing the land, timber and gravel were recovered and sold for P75,000.

A second piece of land with a building was acquired for P5,400,000. The appraiser valued the land at P2,000,000 and the building at P1,000,000. Shortly after acquisition, the building was demolished at a cost of P100,000. A new building was constructed at a cost of P5,000,000 plus excavation fee P80,000, architect fee P120,000 and building permit P70,000.

A third piece of land was acquired for P2,000,000 and was held for undetermined use.

Required - What total cost of land should be reported under property, plant and equipment?