Question 1 An entity started construction on a building for its own use on 1 April...
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Question 1 An entity started construction on a building for its own use on 1 April 20X7 and incurred the following costs: Feasibility study Purchase price of land Stamp duty Legal fees Cost of own inventories used in the construction (net realisable value if sold outside the company GH 60,000) Site preparation and clearance Materials Labour (period 1 April 20X7 to 1 July 20X8) Architect's fees General overheads Income from renting out part of site as storage depot during early phase of construction GH₂'000 12,000 250,000 5,000 10,000 80,000 18,000 100,000 150,000 20,000 30,000 (50,000) 625.000 The following information is also relevant: i. Materials costs were greater than anticipated. On investigation, it was found that materials costing GHe 10 million had been spoiled and therefore wasted and a further GH15 million was incurred as a result of faulty design work. ii. As a result of these problems, work on the building ceased for a fortnight during October 20X7 and it is estimated that approximately GH49 million of the labour costs relate to this period. The building was completed on 1 July 20X8 and occupied on 1 September 20X8. iii. You are required to calculate the cost of the building that will be included in tangible non- current asset additions. Question 1 An entity started construction on a building for its own use on 1 April 20X7 and incurred the following costs: Feasibility study Purchase price of land Stamp duty Legal fees Cost of own inventories used in the construction (net realisable value if sold outside the company GH 60,000) Site preparation and clearance Materials Labour (period 1 April 20X7 to 1 July 20X8) Architect's fees General overheads Income from renting out part of site as storage depot during early phase of construction GH₂'000 12,000 250,000 5,000 10,000 80,000 18,000 100,000 150,000 20,000 30,000 (50,000) 625.000 The following information is also relevant: i. Materials costs were greater than anticipated. On investigation, it was found that materials costing GHe 10 million had been spoiled and therefore wasted and a further GH15 million was incurred as a result of faulty design work. ii. As a result of these problems, work on the building ceased for a fortnight during October 20X7 and it is estimated that approximately GH49 million of the labour costs relate to this period. The building was completed on 1 July 20X8 and occupied on 1 September 20X8. iii. You are required to calculate the cost of the building that will be included in tangible non- current asset additions.
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Ghc 000s Reasons for the treatment Cost of land Purchase price of land 250000 Purchase cost Stamp du... View the full answer
Related Book For
Financial and Managerial Accounting
ISBN: 978-1285078571
12th edition
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac
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