Reference no: EM132697740

An entity both purchases and constructs equipment for use in its operations. The following items for two different types of equipment were recorded in random order during the calendar year 2020:

Purchases

Cash paid for equipment, including VAT of P10,000 110,000

Freight & insurance cost while in transit 2,000

Cost of moving equipment into place at factory 3,100

Wage cost for technicians to test equipment 4,000

Insurance premium paid during 1st year of operation on this equipment 1,500

Special plumbing fixtures required for new equipment 8,000

Repair cost incurred in 1st year of operation related to this equipment 1,300

Construction

Material & purchased parts (gross cost P200,000; failed to take 2% cash discount) 200,000

Imputed interest on funds used during construction (stock financing) 14,000

Labor costs 190,000

Overhead costs (fixed-P20,000; variable-P30,000) 50,000

Profit on self-construction 30,000

Cost of installing equipment 4,400

Problem 1: What is the correct cost of each equipment (purchased and constructed, respectively) an entity should report?

Group of answer choices

Option 1: P120,600 and P454,400

Option 2: P123,400 and P410,000

Option 3: P122,100 and P440,400

Option 4: P117,100 and P440,400