Determine the amount that would be initially recognized for the property, plant, and equipment item presented...

Transcribed Image Text:

Determine the amount that would be initially recognized for the property, plant, and equipment item presented in each scenario. Scenario 1: Purchase price Demolition of building Proceeds from sale of salvaged materials Legal fees for purchase contract and recording ownership Title guarantee insurance Payment of property taxes in arrears Option premium paid for an alternative land not acquired Special assessment for city improvements Requirement 1: Compute for the cost of land. Scenario 2: Cash paid for machine, including VAT of P96,000 Cost of transportation Cost of installation Cost of testing machine Cost of safety rails and platform surrounding machine Cost of water device to keep machine cool Cost of adjustment to machine to make it operate more efficiently Cost of repairing damage during installation Cost of spare parts to cover breakdowns P4,000,000 200,000 20,000 150,000 Estimated dismantling cost to be incurred as required by contract 50,000 100,000 30,000 120,000 P896,000 30,000 50,000 40,000 60,000 80,000 75,000 45,000 155,000 65,000 15,000 25,000 Insurance cost for the current year Cost of training personnel who will use the machine Requirement 2: Compute for the cost of machine. Determine the amount that would be initially recognized for the property, plant, and equipment item presented in each scenario. Scenario 1: Purchase price Demolition of building Proceeds from sale of salvaged materials Legal fees for purchase contract and recording ownership Title guarantee insurance Payment of property taxes in arrears Option premium paid for an alternative land not acquired Special assessment for city improvements Requirement 1: Compute for the cost of land. Scenario 2: Cash paid for machine, including VAT of P96,000 Cost of transportation Cost of installation Cost of testing machine Cost of safety rails and platform surrounding machine Cost of water device to keep machine cool Cost of adjustment to machine to make it operate more efficiently Cost of repairing damage during installation Cost of spare parts to cover breakdowns P4,000,000 200,000 20,000 150,000 Estimated dismantling cost to be incurred as required by contract 50,000 100,000 30,000 120,000 P896,000 30,000 50,000 40,000 60,000 80,000 75,000 45,000 155,000 65,000 15,000 25,000 Insurance cost for the current year Cost of training personnel who will use the machine Requirement 2: Compute for the cost of machine.

Answer rating: 100% (QA)

Scenario 1 P4000000 200000 20000 150000 50000 100000 30000 ... View the full answer