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BSMA Corporation incurred various expenditures in 2031 related to acquiring land, demolishing an old structure, and constructing a new building. Major expenses included P7,800,000 for land acquisition, P39,000,000 for construction costs, and P470,000 to demolish the old structure. Additional expenditures were P2,283,500 for machinery and equipment and P800,000 for land improvements like sidewalks and parking lots.

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Lequin Patrick Alican R.
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29 views1 page

Answer Key

BSMA Corporation incurred various expenditures in 2031 related to acquiring land, demolishing an old structure, and constructing a new building. Major expenses included P7,800,000 for land acquisition, P39,000,000 for construction costs, and P470,000 to demolish the old structure. Additional expenditures were P2,283,500 for machinery and equipment and P800,000 for land improvements like sidewalks and parking lots.

Uploaded by

Lequin Patrick Alican R.
Copyright
© © All Rights Reserved
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BSMA Corporation incurred the following expenditures in 2031:

Acquisition of land P7,800,000


Construction permit fees for buildings P70,000
Land Survey P104,000
Temporary housing for building laborers P215,000
Costs associated with a land title search P12,000
Repayment to the old building's tenants P92,000
A particular evaluation of the government's road projects P40,000
The price to demolish the old structure P470,000
Dividends that would have been due if the funds had been utilized for
building has been allocated to equity instruments. (IGNORE) P100,000
Excavation of the land P200,000
Compensation granted for accidents incurred during construction
where there is no insurance coverage (EXPENSE) P168,000
List of the machinery and equipment that were bought P2,283,500
Construction costs P39,000,000
Trade discount taken on the machinery and equipment purchased P63,500
The cost of paving sidewalks, driveways, and parking lots P800,000
The cost for handling and freight P25,000
Profit on construction, as the difference between the appraised (IGNORE)
value of the asset after the construction and the actual cost incurred P950,000
The cost of testing the machines P62,500

Additional Information:
 •During the building's construction, BSMA Corporation operated a temporary parking lot
on a section of the building site. BSMA Corporation made P325,000 in total from his
inadvertent behavior. (INCOME)
 P32,500 was received from the sale of produce resulting from testing the machines and
equipment.
QUESTION
1. What is the cost of the building? 40,047,000
2. What is the correct cost of the land improvements, if there are any? 800,000
3. What is the cost of the machinery and equipment? 2,275,000
4. What is the correct cost of the land? 7,956,000

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