Problem 26-12 (AICPA Adapted) . During December 2020, an amount of P650,000 as On January 1, 2020, Lazarus Company reported the following incurred to improve leased office space. The related lease property. plant and equipment and transactions during the will terminate on December 31, 2022 and in not expected current year: to be renewed. Land 1,500,000 Building The new building on the second tract of land was 4,000,000 Leasehold improvements constructed for 15,000,000 plus the following costs: 600,000 a. Land site number 621 was acquired for P3,000,000. Excavation fee 60,000 Architectural design fee 150.000 Additionally, to acquire the land the entity paid a P60,000 Building permit 40,000 commission to a real estate agent. Cost of P15,000 was Imputed interest on funds used during construction 500,000 incurred to clear the land for the intended use but not to make room for the construction of a new building. During 1. What total cost of land should be reported on December the course of clearing the land, timber and gravel were 31, 2020 under property, plant and equipment? recovered and sold for P5,000, 7,070,000 A second tract of land site number 622 with a building b. 7.060,000 was acquired for P4,000,000. The closing statement C. 7,370,000 indicted that the land fair value was P2,500,000 and the d. 7,000,000 building fair value was P1,500,000. Shortly after acquisition, the building was demolished at a cost of What total cost of building should be reported on P300,000 to make room for the construction of new December 31, 2020? building. 4. 9,000,000 A third tract of land site number 623 was acquired for b. 9,540.000 P2,000,000 and wan classified as held for sale. C. 9.240,000 9.490,000 Extensive work was done to a building occupied by the 3. What total cost of leasehold improvements should be entity under a lease agreement that expires on December reported on December 31, 20207 31, 2026. The total cost of the work was P1,250,000 which consisted of the following: n. 2,300,000 Painting of celling b. 1,250.000 Lectrical work with useful life of 10 years 100,000 c. 1,900,000 Construction of extension to current working 350.000 1,500,000 area with useful life of 15 years 800,000 The lessor paid one-half of the cost incurred in connection with the extension to the current working area