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WOW, Inc. obtained a land with an old building, that will be accounted for under...

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Accounting

WOW, Inc. obtained a land with an old building, that will be accounted for under property, plant and equipment. The Company intends to demolish the old building, since the old building is already deemed unusable. The following information relates to the land and building:

Purchase price of the land and building P3,500,000

Fair value of the land 3,000,000

Historical cost

Land 2,000,000

Old building 6,000,000

Demolition costs 700,000

Which of the following statements are true?

A. The demolition costs would be capitalized as part of land.

B. The amount of expense to be recognized is P700,000. Which is equal to the demolition costs since the old building is already unusable.

C. The cost of the new building is P17,100,000 million.

D. The cost of land is deemed to be P3,000,000.

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