Scenery Company experienced the following transactions during the year:

1. Purchased machinery for P500,000 cash. 2. Purchased land and building for P5,500,000 cash, including an appraiser’s fee of P100,000. An appraisal indicated fair value as follows: Land 2,000,000 Building 3,000,000 3. Invested in 5,000 shares of another entity at P100 per share. Subsequently, the entity exchanged the 5,000 shares for a delivery equipment. At the time of the exchange, the shares is quoted at 120 and the equipment has a list price of P680,000. Motor vehicle registration was paid in the amount of P3,000. 4. A certain equipment was donated by a shareholder to the entity. An independent appraisal of the equipment placed the fair value at P1,000,000 and the residual value at P100,000. Attorney’s fees and other legal expenses amounted to P25,000. 5. Land and building were acquired by issuing 60,000 shares of P100 par value. The share is quoted at P150 on the date of exchange, and the assets acquired had the following assessed value for tax purposes: Land 1,000,000 Building 3,000,000

Required : 

1. Prepare journal entries to record the above transactions.

2. Determine the amount that will be used as the initial measurement (capitalized amount) of the PPE in each of the given transactions.

Answer rating: 100% (QA)

ANSWER STEP 1 STEP 2 SNo 1 2 3 Particulars MACHINERY TO CA... View the full answer