Q 8: King Kong Limited acquired a piece of land for setting up a factory for Rs. 15 million on 1st October 2018. It took a loan of Rs. 30 million from the State Bank of India at 10 percent for this purpose, the balance being met from internal resources. It also includes one percent of the cost of land towards Commission to the real estate agent and 5% towards the registration fees. The earlier owner has defaulted on payment of property type and the same was also paid by the company amounting to Rs. 50000. It incurred Rs. 1 million towards Clearing and fencing of the land. The construction of factory premises commenced on 1st January 2019 and completed on 31st December 2019. The company repay the loan to the State Bank of India on 31st March 2020. You are required to determine the cost at which the land will be capitalised in the books of King Kong Limited.

Q 8: King Kong Limited acquired a piece of land for setting up a factory for Rs. 15 million on 1st October 2018. It took a loan of Rs. 30 million from the State Bank of India at 10 percent for this purpose, the balance being met from internal resources. It also includes one percent of the cost of land towards Commission to the real estate agent and 5% towards the registration fees. The earlier owner has defaulted on payment of property type and the same was also paid by the company amounting to Rs. 50000. It incurred Rs. 1 million towards Clearing and fencing of the land. The construction of factory premises commenced on 1st January 2019 and completed on 31st December 2019. The company repay the loan to the State Bank of India on 31st March 2020. You are required to determine the cost at which the land will be capitalised in the books of King Kong Limited.

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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