5- Jackson Sdn Bhd (JSB) purchased a piece of land in 1 April 2018 to be...

 

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5- Jackson Sdn Bhd (JSB) purchased a piece of land in 1 April 2018 to be used as its warehouse site for RM 120,000. In order for JSB to effectively use the site, a vacant and unoccupied old building on the land was demolished. A new building was then constructed and completed on 31 December 2018. The costs incurred during the period are listed below: Legal fees for obtaining legal titles of the land Demolition of the vacant building Fees for architect in exciting the new building Property taxes on land (beginning 1 April 2018) Loan obtained to construct the land, 10% interest Construction costs RM 4,000 8,000 19,000 8,500 100,000 416,280 Scraped materials resulting from the demolition of the building of the old building weresold for RM 4,000. (a) Ascertain the amount that JSB should capitalize as the cost of the land and the new building.(5 marks) (b) Explain why each of the items listed was included or not included in your answer in part (a), justifying your answer by referring to the requirements outlined in MFRS 116 - Property, plant & equipment. (4 marks) 5- Jackson Sdn Bhd (JSB) purchased a piece of land in 1 April 2018 to be used as its warehouse site for RM 120,000. In order for JSB to effectively use the site, a vacant and unoccupied old building on the land was demolished. A new building was then constructed and completed on 31 December 2018. The costs incurred during the period are listed below: Legal fees for obtaining legal titles of the land Demolition of the vacant building Fees for architect in exciting the new building Property taxes on land (beginning 1 April 2018) Loan obtained to construct the land, 10% interest Construction costs RM 4,000 8,000 19,000 8,500 100,000 416,280 Scraped materials resulting from the demolition of the building of the old building weresold for RM 4,000. (a) Ascertain the amount that JSB should capitalize as the cost of the land and the new building.(5 marks) (b) Explain why each of the items listed was included or not included in your answer in part (a), justifying your answer by referring to the requirements outlined in MFRS 116 - Property, plant & equipment. (4 marks)

Answer rating: 100% (QA)

a The amount that JSB should capitalize as the cost of the land and the new building can be calculated as follows Cost of the land RM120000 RM4000 scraped materials sold RM8500 property taxes RM132500 ... View the full answer