Vous êtes sur la page 1sur 177

# CHAPTER 5

## PROPERTY, PLANT AND EQUIPMENT

PROBLEMS

5-1.
a.
Cash price is the cost.
P215,000

b.
Downpayment
P100,000

231,847

Cost of machine
P331,847

c.
Purchase price
P22,000,000

Appraisal cost
150,000

## Total cost to be allocated

P22,150,000

Allocation:

Land
22,150,000 x 10,000/25,000
P
8,860,000
Building 22,150,000 x 12,500/25,000
P 11,075,000
Equipment
22,150,000 x 2,500/25,000
P
2,215,000

Cash price

P882,000

## Present value of the disposal costs

50,000 x 0.5019
25,095

Cost of equipment

P907,095

e.

P138,000

## Directly attributable costs 5,000 + 2,000 + 1,500 + 1,800

10,300

Total cost

P148,300

5-2.
(Uy Company)

Land

(49,500,000 x 21,875,000/56,250,000)
19,250,000

Office building

## (49,500,000 x 20,000,000/56,250,000) + 1,200,000

18,800,000

Warehouse

(49,500,000 x
9,375,000/56,250,000)
8,250,000

Managers residence
(49,500,000 x
5,000,000/56,250,000)
4,400,000

5-3.
(Chang Corporation)

a.
720,000 x .90

P648,000

b.
Down payment

P150,000

## Present value of 24 monthly installments

25,000 x 21.2434

531,085

Total

P681,085

5-4.
(Planters Company and Producers Company)

Cash

## Books of Planters Company

50,000

Equipment

350,000

Accumulated Depreciation-Building

540,000

60,000

Building

1,000,000

Building

## Books of Producers Company

400,000

Accumulated Depreciation-Equipment

320,000

Cash

50,000

70,000

Equipment

600,000

## 280,000 350,000 = 70,000 gain

5-5.
(Black Company and Berry Company)

## Books of Black Company

Equipment

460,000

Accumulated Depreciation-Building

540,000

Building

1,000,000

## Books of Berry Company

Building

280,000

Accumulated Depreciation-Equipment

320,000

Equipment

600,000

5-6.
(Abatis Forwarders)

Land

10,340,000

4,400,000

Trucks

12,800,000

Cash

`
340,000

## Gain on Exchange of Trucks

1,600,000

5-7.

Equipment (new)

55,000

Accumulated Depreciation

16,000

8,000

Equipment ((old)

48,000

31,000

5-8.
King Company

Tooling Machine

172,800

Automobile (net)

135,000

37,800

Princess Company

Machinery (new)

1,200,000

340,000

## Loss on Exchange of Machinery

190,000

Machinery (old)

850,000

Cash

880,000

5-9.
(Urban Corporation)

Land

Land
Improvements
Building

Land purchase
P12,000,000

300,000

150,000

P 80,000

270,000

## Building construction costs

15,000,000

Landscaping costs*

P3,500,000

## Equipment purchased of use in excavation

(800,000 640,000)

160,000

100,000

## Salvage from the demolished oldbuilding

(70,000)

Total costs
P2,500,000
P350,000
P5,610,000

*Landscaping costs may be charged to the land account if there is an indication that such an expenditure is

## Chapter 5- Property, Plant and Equipment

permanent in nature.

Compensation for injury to construction worker is chargeable to loss; this expenditure could have been avoided had
the company obtained insurance on its workers. If an insurance was acquired, the amount of premiums paid may be
charged to the building being constructed.

Profit on construction is not recognized elsewhere in the accounts. The self-constructed asset should be charged for
the actual costs incurred in its completion.

The cost of modifications to the new building per instruction by the building inspectors is charged to loss since this
expenditure is not a necessary expense for the asset. This was incurred as a result of the companys negligence and
could have been avoided had proper planning been done.

## Purchase price of land

P4,000,000
Payments to tenants to vacate premises
200,000
Demolition of old building
100,000
Legal fees for purchase contract and recording ownership
150,000
Delinquent property taxes on land
50,000
Proceeds from sale of salvaged materials
(20,000)
Total
P4,480,000

5-11

(Yu Corporation)

Machinery

Land

and

Land
Improvements
Buildings
Equipment

P7,000,000
P500,000

P 9,000,000
P 980,000

4,500,000

5,000,000

## Legal fees, realty taxes and

documentation expenses
50,000

Payment to squatters
100,000

120,000

demolition
(150,000)

500,000

erected

12,000,000

## Building permit fee

20,000

Excavation expenses

50,000

Architects fees

150,000

2,000,000

charges

60,000

140,000

machines

400,000

## Balances, December 31, 2013

P16,620,000
P1,000,000
P21,220,000
P3,580,000

The interest of P150,000 is an imputed interest and is not reported elsewhere in the financial statements.

The royalty payments of machines purchased are charged to operating expense for the period.

a.
P5,000,000 x 10%
P500,000

( 125,000)

## Chapter 5- Property, Plant and Equipment

Capitalized interest

P375,000
b.
1,250,000 x 10%

P 125,000

93,750

1,250,000 x 10%
x 6/12
62,500

1,250,000 x 10%
x 3/12
31,250

Total interest

P 312,500

## Less interest income earned on temporary investment of loan

40,000

Capitalized interest

P
272,500

5,000,000

P5,272,500

## Computation of average accumulated expenditures:

1,400,000 x 12/12

P1,400,000

1,000,000 x 9/12

750,000

1,200,000 x 5/12

500,000

1,000,000 x 3/12

250,000

400,000 x 0/12

----------

P2,900,000

## (10% x 1,600,000) + (12% x 2,000,000)

11.11%

1,600,000 + 2,000,000

1,800,000 x 10%
P180,000

10,000

P170,000

## 2,900,000 1,800,000 = 1,100,000

1,100,000 x 11.11%

122,210

Capitalized interest

P292,210

d.
2,800,000 x 10%

P280,000

1,600,000 x 10%

160,000

2,000,000 x 12%

240,000

P680,000

308,125

P371,875

## 5-13. (Lim Company)

3,600,000 x 12/12

P3,600,000

6,000,000 x 7/12

3,500,000

15,000,000 x 6/12

7,500,000

15,000,000 x 1/12

1,250,000

## Average accumulated expenditures

P15,850,000

a.
Interest on specific borrowing (30,000,000 x 12%)

P 3,600,000

## Less interest revenue earned from temporary investments of

specific borrowing

249,000

Capitalized interest

P 3.351,000

b.
Interest on specific borrowing (12,000,000 x 12%)

P 1,440,000

249,000

P 1,191,000

## 15,850,000 12M = 3,850,000; 3,850,000 x 12.14%*

467,390

Capitalized interest

P 1,658,390

## 5-14. (Alondra Corporation)

(a)
Average accumulated expenditures:

4,000,000 x 12/12

P 4,000,000

8,000,000 x 9/12
6,000,000

12,200,000 x 6/12
6,100,000

8,800,000 x 3/12
2,200,000

7,000,000 x 0/12
------

P18,300,000

## 10% x 12,000,000 + 12% x 14,000,000 = 11.08%

12,000,000 + 14,000,000

Capitalized interest

## Specific borrowing (12% x 17 million)

P2,040,000

General borrowings

## 18,200,000 17,000,000 = 1,200,000

1,200,000 x 11.08%

132,960

Total

P2,172,960

## Total cost of building = Total construction cost + capitalized interest cost

= P40,000,000 + P2,172,960

= P42,172,960
5-15.
(Pifer Corporation)

(a)
Materials

P1,250,000

Direct labor
250,000

## Overhead 2,200,000 (150% x 1,000,000)

700,000

Total

P
2,200,000

(b)
Materials

P1,250,000

Direct labor
250,000

440,000

Total

P
1,940,000
5-16.
(Pioneer Development Corporation)

(a)
Land
3,000,000

Cash
50,000

## Unearned Income from Government Grant

2,950,000

Building
15,000,000

Cash
15,000,000

Depreciation Expense
750,000

Accumulated Depreciation
750,000

(15,000,000/20 years)

147,500

## Income from Government Grant

147,500

(2,950,000/20 years)

(b)
Property, Plant and Equipment

Land

P3,000,000

## Less Unearned Income from Government Grant

2,802,500

P 197,500

Alternatively, the unearned income from government grant may be presented as part of the entitys

liabilities.

## Depreciation charges for 2012 and 2013

2012
2013
1.
SL
(800,000 80,000) / 8 = 90,000

## 90,000 x 9/12= 67,500

90,000
2.
Hrs
720,000/100,000 hrs = 7.20/hr.

worked
7.20 x 4,500 hrs = 32,400
7.20 x 5,500 hrs = 39,600
3.

Units of
720,000/900,000 units = 0.80/unit

output
0.80 x 40,000 units = 32,000
0.80 x 60,000 units = 48,000
4.
SYD
720,000 x 8/36 x 9/12 = 120,000
720,000 x 7.25/36 =145,000
5.
DDB
2/8 = 25%
800,000-150,000=650,000

## 25% x 800,000 x 9/12=150,000

25% x 650,000 = 162,500
6.
150% DB
1.5/8 = 18.75%
800,000-112,500=687,500

## 18.75% x 800,000 x 9/12= 112,500

18.75% x 687,500) = 128,906

## Carrying amount of the asset at the end of 2013

Depreciation Method

Cost
Accum. Depr.
Carrying amount
1.
Straight-line
800,000
157,500
642,500
2.
Hours worked
800,000
72,000
728,000
3.
Units of output
800,000
80,000
720,000
4.
SYD
800,000
265,000
535,000
5.
DDB
800,000
312,500
487,500
6.
150% declining balance
800,000
241,406
558,594

## 5-18. (De Oro Company)

Method 1 -

Straight-line method

Method 2 -

## Method 3 150% declining-balance method

1.5 4 = 37.5%

37.5% x 340,000
=
127,500

37.5% x (340,000-127,500)=
79,688

b.
Straight line method
P80,000

320,000 x 2/10
64,000

## 150% declining balance method

37.5% x (340,000-127,500-79,688)
49,804

a.

## 2/5 = 40%; 26,400 40% = 66,000

b. 12,000 x 5 years = 60,000; 66,000 60,000 = 6,000 c. Carrying amounts, end of year 3
Straight-line (66,000 36,000)

= P30,000
Sum-of-the-years digits(66,000 48,000
)
= P18,000
Double-declining balance (66,000 52,744)

= P13,256

The method with the lowest carrying amount at time of sale will yield the highest amount of gain on disposal.
Therefore, the double-declining balance method will provide the highest gain on disposal at the end of year 3.

## Depreciation Expense for 2013

2010:
25% x 800,000 x 1/2
P100,000
2011:
25% x (800,000 100,000)
175,000

131,250

P98,437.50

P98,437.50

b.
Sales price

P300,000

Cost

P800,000

## Less accumulated depreciation

720,000 x (3.75/8)

337,500
462,500

Loss on sale

P162,500
5-21.
(Asiaplus Corporation)

(a)
Depreciation Expense Equipment

19,200

## Accumulated Depreciation - Equipment

19,200

(82,000-2,000)/10 = P8,000

(33,000-3,000)/6

= 5,000

(22,000-1,000)/7

= 3,000

(18,000 -2,000)/5

= 3,200

Total
P19,200

(b)

Cash

5,000

12,800

## Loss on Sale of Equipment Part

200

Equipment

18,000

(c)
Equipment

20,000

Cash

20,000

(d)
Depreciation Expense Equipment

19,200

## Accumulated Depreciations Equipment

19,200

(e)
Depreciation Expense Equipment

20,000

## Accumulated Depreciation Equipment

20,000

Components 1 3 =

P16,000

Component 4 = 20,000/5
4,000

P20,000

5-22.

(Total Company)

a.
Cost

P1,200,000

440,000

th

P 760,000

th

P 188,571

b.
th

P 140,000

th

## Revised depreciation for the 5 year

760,000 / 4 years

P 190,000
5-23. (Standard Company)

Cost

P500,000
Less accumulated depreciation:

2009
20% x 500,000
100,000

2010
20% x 400,000
80,000

2011
20% x 320,000
64,000

2012
20% x 256,000
51,200
295,200

## Carrying amount, January 1, 2013

P204,800
Depreciation expense for 2013

P 38,960

## Depreciation for 2013

January 1 to August 1

## (378,000 35,000)/5 x 7/12

P40,017

August 1 to December 31

## (320,800 50,000) / (5 2) + 2 = 270,800

270,800 / 5 x 5/12

22,567

Total

P62,584

(b)
Cost

P378,000

137,200

P240,800

80,000

P320,800

22,567

P298,233

5-25.
(Chu, Inc.)

P264,000

264,000/ 2 yrs.

132,000

## Accumulated depreciation balance, December 31, 2013

P396,000
5-26.

(a)
Accumulated Depreciation

137,500

112,500

Machinery

250,000

Machinery

320,000

Cash

320,000

## To capitalize the cost of replacement.

Depreciation Expense

82,875

Accumulated Depreciation

82,875

50,000

450,000

(112,500)

320,000

Remaining life

10 yrs

65,750 x
32,875

82,875

## Chapter 5- Property, Plant and Equipment

Alternative computation:

16,000

25,000 x 6/12

12,500

## 1,000,000 250,000 = 750,000

(750,000/10) x 6/12

37,500

16,875

## Total depreciation expense for 2013

82,875
(b)
Accumulated Depreciation
176,000

144,000

Machinery

320,000

## 32,000 x 5.5 years = 176,000

Machinery

320,000

Cash

320,000

Depreciation Expense

81,300

Accumulated Depreciation

81,300

50,000

450,000

(144,000)

320,000

Remaining life

10 yrs

62,600 x
31,300

## Total depreciation expense for 2013

81,300
5-27. (Remedios Company)

(a)
Cost of Leasehold Improvements

P1,200,000

480,000

## Carrying value, December 31, 2012

P
720,000

(b)
Carrying value, December 31, 2012
P
720,000

(10 4 + 5)

## Remaining useful life is 8 years

(12 4)

Shorter period is

8 years

P
90,000

## and the assets value in use

P420,000
Fair value less cost to sell (450,000 30,000)
P420,000
Value in use

20,000 x 0.6209

12,418

P391,498

Cost
P860,000

## Less accumulated depreciation

(810,000/9) x 4 years
360,000
P500,000
Recoverable amount (see a)

420,000
Impairment loss

P 80,000

## Depreciation expense for 2013

420,000/5 years
P 84,000
5-29.
(Island Souvenirs, Inc.)

(a)
Value in use (1,500,000 700,000) x 3.7908
P3,032,640

## Residual value (500,000 x 0.6209)

310,450

Total

P3,343,090

(b)
Carrying value (9,000,000 1,500,000)
P7,500,000

P3,343,090)
3,343,090

Impairment loss
P4,156,910

## (3,343,090 500,000) / 5 years

P 568,618

5-30.
(Lu Company)

Depreciation Expense

56,250

Accumulated Depreciation

56,250

## To record depreciation expense for 2012

(500,000 50,000) / 8

Impairment Loss
131,250

Accumulated Depreciation

131,250

## Carrying value 500,000 (56,250 x 3 years)

P331,250

Recoverable value

200,000

Impairment loss

P131,250

Depreciation Expense

90,000

Accumulated Depreciation

90,000

## (200,000 20,000) / 2 years

5-31.

(a)
Depreciation expense

2011
2012

5,600,000 / 16 years

350,000
350,000
(b)
December 31, 2013

Depreciation Expense

350,000

Accumulated Depreciation

350,000

Accumulated Depreciation

2,100,000

## Recovery of Previous Impairment

2,100,000

Recoverable amount

7,500,000

10

## Carrying value (5,600,000 700,000)

4,900,000
Increase in value
2,600,000
Limit on recovery:

Impairment loss
2,400,000

Recovered impairment

## 2,400,000 / 16 years = 150,000; 150,000 x 2 years

300,000

Limit on recovery
2,100,000
(c)
Cost
10,000,000

3,000,000

7,000,000

## To check: Limit on carrying value without impairment

10,000,000 x 14/20
7,000,000

## Depreciation expense for 2014

7,000,000 / 14 years

500,000

(a)
Cost

P300,000

( 60,000)

## Carrying amount 12/31/12 before impairment

P240,000

Recoverable amount

192,000

Impairment loss

P 48,000

(b)
Carrying value 12/31/12 after impairment

P192,000

( 24,000)

## Carrying amount 12/31/13 before recovery

P168,000

(c)
Carrying amount before recovery of impairment
P168,000

## New recoverable amount

222,000

Increase in value

P 54,000

Limit on recovery

Previous impairment

P48,000

## Recovered in 2013 (30,000 24,000)

(6,000)

Limit on recovery
P42,000

## Impairment recovery to be recognized at 12/31/13

P 42,000

5-33.

a.

01/01/11
Equipment

2,000,000

Revaluation Surplus

1,200,000

Accumulated Depreciation

800,000

## 50% x 4,000,000 = 2,000,000

b.
50% x 1,600,000 = 800,000

12/31/11
Depreciation Expense

600,000

Accumulated Depreciation-Equipment

600,000

## 3,600,000 6 yrs = 600,000

12/31/11
Revaluation Surplus

200,000

Retained Earnings

200,000

## 1,200,000 6 yrs = 200,000

12/31/12
Depreciation Expense

600,000

Accumulated Depreciation-Equipment

600,000

12/31/12
Revaluation Surplus

200,000

Retained Earnings

200,000

11

## Chapter 5- Property, Plant and Equipment

c.

01/01/13
Accumulated Depreciation-Equipment

600,000

Revaluation Surplus

400,000

Equipment

1,000,000
12/31/13
Depreciation Expense

500,000

Accumulated Depreciation-Equipment

500,000

## 2,000,000 4 yrs = 500,000

Revaluation Surplus

100,000

Retained Earnings

100,000

1,200,000-200,000-200,000-400,000=400,000

## 400,000 4 yrs = 100,000

Original
1/1/11
1/1/11
2011
12/31/12
1/1/13

1/1/13
12//31/13

and

2012

Cost
4.000M
+2.00M
6.000M
6.00M
-1.00M
5.00M
5.00M
Accum
1.600M
+0.80M
2.400M
+1.20M
3.60M
-0.60M
3.00M
3.50M
CV
2.400M
+1.20M
3.600M
-1.20M
2.40M
-0.40M
2.00M
1.50M
5-34. (Samsung Company)

1/1/08
Machinery

3,600,000

Cash

3,600,000
12/31/08
Depreciation Expense (3,600,000/10)

360,000

Accumulated Depreciation

360,000
12/31/09
Depreciation Expense

360,000

Accumulated Depreciation

360,000

Machinery

300,000

Accumulated Depreciation

60,000

Revaluation Surplus

240,000

Cost

Revalued

Increase

Machinery

3,600,000

3,900,000
300,000

Accumulated Depreciation

720,000

780,000
60,000

Net

2,880,000

3,120,000
240,000
12/31/10
Depreciation Expense (3,120,000 / 8 years)

390,000

Accumulated Depreciation

390,000

Revaluation Surplus

30,000

## Retained Earnings (390,000 360,000)

30,000
12/31/11
Depreciation Expense (3,120,000 / 8 years)

390,000

Accumulated Depreciation

390,000

Revaluation Surplus

30,000

## Retained Earnings (390,000 360,000)

30,000
12/31/11
Accumulated Depreciation

220,000

## Revaluation Surplus (240,000 30,000 30,000)

180,000

Revaluation Loss

150,000

Machinery

550,000

New Rev
Ledger Bal
Decrease

Machinery

3,350,000

3,900,000
550,000

Accumulated Depreciation

1,340,000

1,560,000
220,000

Net

2,010,000

2,340,000
330,000

12

## Chapter 5- Property, Plant and Equipment

12/31/12
Depreciation Expense (2,010,000 / 6 years)
335,000

Accumulated Depreciation

335,000
12/31/13
Depreciation Expense

335,000

Accumulated Depreciation

335,000
12/31/13
Machinery

1,150,000

Accumulated Depreciation

690,000

## Recovery of Previous Revaluation Loss (P & L)

100,000

Revaluation Surplus

360,000

460,000

150,000

## 150,000 / 6 = 25,000; 25,000 x 2 years

50,000
100,000

Revaluation surplus

360,000

New Rev
Ledger Bal

Increase

Machinery

4,500,000
3,350,000
1,150,000

Accumulated Depreciation
2,700,000
2,010,000
690,000

Net
1,800,000
1,340,000
460,000

Check:

1,440,000

## Revalued amount, 12/31/12

1,800,000

Revaluation Surplus

360,000
12/31/14
Depreciation Expense 1,800,000/4

450,000

Accumulated Depreciation

450,000

## Revaluation Surplus (360,000 / 4 years)

90,000

Retained Earnings

90,000
5-35. (Lakers, Inc.)

(a)
Cost

P100,000

(100,000/10)
( 10,000)

Net

90,000

Revalued amount

112,500

## Revaluation surplus 12/31/10

P 22,500
(b)
Carrying amount 12/31/12 (112,500 x 7/9)

P 87,500

Recoverable amount

67,375

Decrease in value

P 20,125

( 17,500)

P
2,625

(c)
As of 1/1/13

P67,375

( 9,625)

## Net before revaluation on 12/31/13

57,750

Revalued amount

73,000

Increase in value

P15,250

( 2,250)

P13,000

100,000 x 6/10

P60,000

13,000

13

P73,000

Purchase price

P4,450,000
Residual value

650,000)

750,000

P4,550,000

## Estimated supply of mineral resources

3,500,000
Depletion expense per ton in 2012
P
1.30

## Number of tons removed during 2012

x
550,000
Depletion expense for 2012

P
715,000
Depletable cost, January 1, 2012 (see above)
P4,550,000

## Less depletion expense for 2012

715,000)
Add development costs incurred and capitalized during 2013

961,000

## Depletable cost for 2013

P4,796,000
Revised estimated supply of mineral resource, 2013
4,360,000

## Revised depletion rate per ton

P
1.10
Number of tons removed during 2013

700,000

P
770,000

## 5-37. (Ong Exploration Company)

Purchase price

P45,000,000
Development costs

1,500,000
Salvage value

( 6,000,000)
Restoration costs at present value (2,500,000 x 0.4632)

1,158,000

Depletable cost

P41,658,000

## Estimated recovery from the property

10,000,000
Depletion rate per metric ton

P
4.1658
Resources extracted during 2012

x 1,000,000
Depletion expense for 2012

P 4,165,800
Depletable cost, 2012 (see above)

P41,658,000
Depletion expense for 2012

(
4,165,800)
Development costs in 2013

750,000

P38,242,200

## Remaining number of metric tons (9,250,000-1,000,000)

8,250,000
Revised depletion per metric ton
(rounded)

P
4.64

x 1,500,000

P 6,960,000

## 4,000,000 + 400,000 200,000

1,400,000 tons
P3.00
Depreciation expense per ton:

300,000 20,000

1,400,000 tons
P0.20
a.
Cost of ending inventory

12,000

14

x 11.20

## Ending Inventory, December 31, 2013

P134,400

b.
Cost of goods sold

108,000

x 11.20

## Cost of goods sold for 2013

P1,209,600

c.
Depletable cost in 2013

P4,200,000

120,000

x 3.00
360,000

P3,840,000

800,000

P
4.80

P
280,000

( 24,000)

256,000

800,000

## Revised depreciation rate for 2014

P
0.32

5-39.
(Yap Machine Shop)

a.

1.
Cash

1,700,000

Accumulated Depreciation-Building

450,000

## Loss on Disposal of Assets

150,000

Land

800,000

Building

1,500,000

2.
Cash

120,000

Accumulated Depreciation-Equipment

250,000

30,000

Equipment

400,000

3.
Equipment

298,000

Cash

298,000

4.
Land

8,000,000

## Income from Donated Asset

7,800,000

Cash

200,000

5.
Income from Donated Asset

240,000

Cash

240,000

6.
Equipment

150,000

Accumulated Depreciation-Equipment

15,000

22,000

Equipment

40,000

Cash

103,000

7.
Building

28,000,000

b.
Cash

28,000,000

## Property, Plant and Equipment (Net)

Beginning balance
2,150,000
(1)

1,850,000

(3)

298,000
(2)

150,000

(4)

8,000,000

(6)

125,000

15

(7)
28,000,000

Total
38,813,000
Total
2,000,000
Balance
36,573,000

## 5-40. (Pat Corporation)

Depreciation and amortization expense for year ended December 31, 2013
Buildings

## 1.5/25 = 6%; (12,000,000-2,631,000) x 6%

P 562,140
Machinery and Equipment

P900,000

17,250

P 882,750
New machine

## 3,100,000 x 10% x 6/12

155,000

Total

P1,037,750
Automotive Equipment

## Based on beginning balance

P180,000
Less depreciation of car traded 180,000 x 2/10
36,000
P 144,000
New car (240,000 x 4/10)

96,000

Total

P
240,000
Leasehold Improvement (1,680,000 x 8/80)

P 168,000

P 40,000

54,000

P(14,000)

## Machine destroyed by fire

Insurance recovery

P155,000

)
92,000

63,000

P 49,000

Theory

## MULTIPLE CHOICE QUESTIONS

MC1
A
MC11
B
MC21
D

MC31
D

MC2
B
MC12
A
MC22
B

MC32
C

MC3
D
MC13
D
MC23
D

MC33
C

MC4
D
MC14
D
MC24
B

MC34
C

MC5
C
MC15
B
MC25
D

MC35
D

MC6
A

MC16
B
MC26
D

MC7
C
MC17
D
MC27
C

MC8
B
MC18
B
MC28
A

MC9
C
MC19
D
MC29
C

MC10
B
MC20
B
MC30
B

Problems

MC36
D
14,400,000 x 5/20 = 3,600,000

MC37
C
200,000 + 3,000 + 6,000 = 209,000

MC38
D
Cost of equipment is the fair value of FVPL exchanged

MC39
D
(800,000 20,000) x 12/78 x 9/12 = 90,000

MC40

C
780,000 x 11.25/78 = 112,500; 90,000 + 112,500 = 202,500

16

## Chapter 5- Property, Plant and Equipment

MC41
A
4,500,000
+ 30,000 + 6,000 + 40,000 + 60,000 = 4,636,000 Land

## 10,000 + 50,000 + 90,000 + 45,000 + 150,000 + 9,800,000 = 10,145,000 Building

MC42
C
1,800,000 x 10% = 180,000; 180,000 45,000 = 135,000

2,500,000
1,800,000 = 700,000;7 00,000 x 9% = 63,000; 135,000+63,000=198,000
MC43
C
4,000,000 x 10% x 6/12 = 200,000

## 750,000 x 12% x 6/12 = 45,000; 200,000 + 45,000 = 245,000

MC44
C
1,000,000
+ (4,000,000 2) = 3,000,000; 2,000,000 x 10% = 200,000

MC45
C

## 40,000 30,000 = 10,000; 20,000 10,000 = 10,000 Gain

MC46
B
20,500 6,000 = 14,500; 14,500 16,800 = 2,300
MC47
A
4,500,000
+ 1,320,000 + 77,000 + 53,000 = 5,950,000 total depreciable cost

## 112,500 + 66,000 + 9,625 + 13,250 = 201,375 total depreciation expense

5,950,000
201,375 = 29.5 yrs.
MC48
A
4,800,000
+ 1,400,000 + 82,000 + 53,000 = 6,335,000 total cost

## 201,375 6,335,000 = 3.18%

MC49
D
4,500,000
40 yrs. = 112,500
MC50
C
77,000 x 6/36 = 12,833

MC51
A
240,000 12,000 = 228,000; 228,000 120 mos = 1,900; 1,900 x 63 mos = 119,700

## 240,000 119,700 = 120,300; 120,300 130,000 = 9,700

MC52
C
270,000 x (8+7)/36 = 112,500

## 270,000 8 = 33,750; 33,750 x 2 = 67,500; 112,500 67,500 = 45,000

MC53
B
1.5/5 = 30% depreciation rate; 600,000 x 30% x = 90,000

## 600,000 90,000 = 510,000; 510,000 x 30% = 153,000

MC54
B
240,000 40 = 6,000; 240,000 x .90 x.90 x .10 = 19,440; 72,000 x 2/10 = 14,400
MC55
A
90,000 x (5+4+3)/15 = 72,000 reported accum depreciation under SYD

## 90,000 x 2/15 = 12,000

MC56
C
160,000/4 = 40,000; 400,000/40,000 = 10 years

## 240,000 40,000 = 200,000; 200,000 65,000 = 135,000

MC57
A
900,000 420,000 = 480,000; 480,000 300,000 = 180,000
MC58
D
(900,000 300,000) / 3 yrs = 100,000; 600,000 + 100,000 = 700,000
MC59
D
42,000 x 55 = 2,310,000; 2,310,000/7 = 330,000; 330,000 + 5,000 = 335,000
MC60
C
49,200,000 43,755,000 = 5,445,000; 5,445,000 4.5 years = 1,210,000/yr

## 1,210,000 x 40 yrs = 48,400,000; 49,200,000 48,400,000 = 800,000

MC61
C
54,000,000 6,000,000 + 7,200,000 = 55,200,000; 55,200,000 2,400,000 = 23
MC62
A
3,400,000
200,000 + 800,000 = 4,000,000

4,000,000
4,000,000 = 1.00 per ton; 1.00 x 375,000 tons = 375,000
MC63
B
3,600,000
800,000 = 4.50; 4.50 x 60,000 = 270,000

## 96,000 6,000 = 90,000; 90,000 800,000 = 0.1125; 0.1125 x 60,000 = 6,750

MC64
D
P0 for Quarry No. 1 since the asset is not owned.

## 1M 300,000 = 700,000; 700,000 100 M = 0.007/ton; 0.007 x 1,380,000 = 9,660

MC65
B
.007 x 40,000,000 = 280,000; 700,000 280,000 = 420,000

## 420,000 20,000,000 = 0.21; 0.21 x 1,380,000 = 28,980

MC66
C
(8,600,000-600,000) 40 yrs = 200,000; 200,000 x 5 yrs. = 1,000,000

## 8,600,000-1,000,000-600,000 = 7,000,000; 7,000,000 30 yrs = 233,333

MC67
D
8,000,000
1,000,000 233,333 = 7,366,667; 7,500,000 7,366,667 = 133,333
MC68
C
160,000 x 10 yrs = 1,600,000; 4M 1.6M = 2.4M; 3,240,000 2,400,000 = 840,000
MC69
B
4,000,000
160,000 = 25 years; 25 10 = 15 years; 3,240,000 15 = 216,000
MC70

B
160,000 x 9 yrs. = 1,440,000; 4,000,000 1,440,000 = 2,560,000

2,560,000
500,000 = 2,060,000; 2,060,000 16 yrs. = 128,750

2,060,000
128,750 = 1,931,250; 3,240,000 1,931,250 = 1,308,950

## 160,000128,750=31,250; 500,00031,250 =468,750; 1,308,750 468,750 = 840,000

MC71
A
(360,000 6) x 2.5 yrs = 150,000

## 360,000 150,000 = 210,000 book value; 210,000 70,000 = 140,000 loss

MC72
D
70,000 3.5 remaining years = 20,000; 70,000 20,000 = 50,000
MC73
C
1,800,000
600,000 = 1,200,000; 600,000 3 = 200,000

1,200,000
+ 200,000 = 1,400,000
MC74
C

3,000,000
300,000 = 2,700,000; 2,700,000 10 = 270,000

17

## Chapter 5- Property, Plant and Equipment

270,000 x 4 = 1,080,000

## 3,000,000 1,080,000 = 1,920,000; 1,920,000 900,000 = 1,020,000

MC75
B
1,920,000 6 yrs = 270,000 or 2,700,000 10 yrs = 270,000

18