Reference no: EM133184696

Question - The following transactions relate to the plant asset acquisitions of the Gray Company during 2021:

1. The Gray Company purchased a piece of land with an old warehouse upon it for P225,000. The Gray Company paid legal fees of P15,000 to obtain title to the property.

2. The old warehouse was demolished at a cost of P75,000 less P10,000 realized from the salvage value of the materials.

3. A new warehouse was constructed by the Gray Company. The costs of construction were: P6,500 for building permits, P17,000 for architect's fees, P85,000 for excavation, and P900,000 for construction costs.

4. The Gray Company paid P9,000 for landscaping of the grounds around the new warehouse, P110,000 for paving and lighting a parking lot adjacent to the new warehouse, and P11,000 for a special assessment for new sewers.

5. The Gray Company purchased an office building for P1,950,000. Appraisal values were P100,000 for the land, P1,000,000 for the office building, and P900,000 for the equipment.

6. The Gray Company purchased equipment with an invoice price of P60,000. Freight charges on the equipment were P150. Insurance costs during shipment were P50; insurance costs for the remainder of the year were P300. Installation costs of the equipment were P4,000.

7. The Gray Company paid legal fees of P3,500 to register its trademark. The estimated fair market value of the trademark is P850,000. The Gray Company paid legal fees of P45,000 in a successful defense of the trademark.

Required -

1. Determine the amounts that should be recorded in the land, land improvements, building, equipment, and trademark accounts.

2. Determine the amount of amortization expense to be recorded on the trademark during 2021.