Question 1Komano Berhad purchased a piece of land on 1 April 2018 to be used as its warehouse sitefor RM120,000. In order for Komano Berhad to effectively use the site, a vacant andunoccupied old building on the land was demolished. A new building was then contructed andcompleted on 31 December 2018. The costs incurred during the period are listed below:Legal fees for obtaining legal tittle of the landRM 4,000Demolition of the vacant buildingRM 8,000Fees for architects in erecting the new buildingRM24,000Property taxes on land (Beginning 1 April 2017)RM6,000Loan obtained to construct the land, 10%RM100,000Construction costsRM300,000Scrapped materials resulting from the demolition of the old building were sold for RM4,000.Required:a) Ascertain the amount that Komano Bhd should capitalise as the cost of the land andthe cost of new building, separately.b) Explain why each of the items listed were included or not included in your answer topart (a), justifying your answer by reffering to the requirements outlined in MFRS 116and MFRS 123.

Malasian Financial Reporting Standard 116 aims at proper…

ce for RM120,000. In order for Komano Berhad to effectively use the site, a vacant and unoccupied old building on the land was demolished. A new building was then contructed and completed on 31 December 2018. The costs incurred during the period are listed below:

ce for RM120,000. In order for Komano Berhad to effectively use the site, a vacant and unoccupied old building on the land was demolished. A new building was then contructed and completed on 31 December 2018. The costs incurred during the period are listed below:

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter14: Property Transactions: Capital Gains And Losses, § 1231, And Recapture Provisions

Section: Chapter Questions

Problem 75P

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