Hawks Corporation’s Property, Plant and Equipment section of its statement of financial position as of December 31, 2019 included the following: LandP 400,000Buildings3,200,000 The following transactions occurred during 2020: Land site number 102 was acquired for P4,000,000. Additionally, to acquire the land the entity paid a P240,000 commission to a real estate agent. Costs of P60,000 were incurred to clear the land. During the course of clearing the land, timber and gravel were recovered and sold for P20,000. A second tract of land (site number 103) with a building was acquired for P1,200,000. Based on reliable information at the time of acquisition, fair value of land is P800,000 and the building P400,000. Shortly after acquisition, the building was demolished at a cost of P120,000. A new building was constructed for P1,600,000 plus the following costs: Excavation feesP 44,000Architectural design fees32,000Building permit fee4,000 The building was completed and occupied on September 1, 2020. Determine the balance of the Buildings as of December 31, 2020.a. P5,000,000b. P5,400,000c. P5,280,000d. P4,880,000

OPTION D:- P 4,880,000 is the correct answer.

Answered: Hawks Corporation’s Property, Plant and…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Hawks Corporation’s Property, Plant and Equipment section of its statement of financial position as of December 31, 2019 included the following:

Land	P 400,000
Buildings	3,200,000

The following transactions occurred during 2020:

Land site number 102 was acquired for P4,000,000. Additionally, to acquire the land the entity paid a P240,000 commission to a real estate agent. Costs of P60,000 were incurred to clear the land. During the course of clearing the land, timber and gravel were recovered and sold for P20,000.

A second tract of land (site number 103) with a building was acquired for P1,200,000. Based on reliable information at the time of acquisition, fair value of land is P800,000 and the building P400,000. Shortly after acquisition, the building was demolished at a cost of P120,000. A new building was constructed for P1,600,000 plus the following costs:

Excavation fees	P 44,000
Architectural design fees	32,000
Building permit fee	4,000

The building was completed and occupied on September 1, 2020.

Determine the balance of the Buildings as of December 31, 2020.

a. P5,000,000

b. P5,400,000

c. P5,280,000

d. P4,880,000

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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