fin ac robles empleo Ch 5 Vol 1 Answers2012

CHAPTER 5 PROPERTY, PLANT AND EQUIPMENT

PROBLEMS

5-1 a. Cash price is the cost. P215,000 b. Downpayment P 50,000 Notes payable (50,000 x 3.1699) 158,495 Preference shares (500 x 110) 55,000 Cost of machine P263,495 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

d. Cash price 800,000 x .90 x .98 P705,600 Present value of the disposal costs 50,000 x 0.5019 25,095 Cost of equipment P730,695 e. Purchase price 154,560/1.12 P138,000 Directly attributable costs 5,000 + 2,000 + 1,500 + 1,800 10,300 Total cost P148,300

5-2 (Uy Company) Land (4,500,000 x 2,187,500/5,625,000) 1,750,000 Office building (4,500,000 x 2,000,000/5,625,000) + 120,000 1,720,000 Warehouse (4,500,000 x 937,500/5,625,000) 750,000 Manager’s residence (4,500,000 x 500,000/5,625,000) 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) (a)

Books of Planters Company Cash 50,000 Equipment 350,000 Accumulated Depreciation-Building 540,000 Loss on Exchange of Building 60,000 Building 1,000,000 1,000,000-540,000 = 460,000 book value 460,000 – 400,000 = 60,000 loss

Chapter 5- Property, Plant and Equipment

41

Books of Producers Company Building 400,000 Accumulated Depreciation-Equipment 320,000 Cash 50,000 Gain on Exchange of Equipment 70,000 Equipment 600,000 600,000-320,000 = 280,000 280,000 – 350,000 = 70,000 gain

(b)

Books of Planters Company Equipment 460,000 Accumulated Depreciation-Building 540,000 Building 1,000,000

Books of Producers Company Building 280,000 Accumulated Depreciation-Equipment 320,000 Equipment 600,000

5-5 (Abatis Forwarders)

Land 10,340,000 Accumulated Depreciation – Trucks 4,400,000 Trucks 12,800,000 Cash ` 340,000 Gain on Exchange of Trucks 1,600,000

5-6 (Business Processing, Inc.)

Equipment (new) 55,000 Accumulated Depreciation 16,000 Loss on Exchange of Equipment 8,000 Equipment ((old) 48,000 Cash (64,000 – 33,000) 31,000

5-7 King Company

Tooling Machine 172,800 Automobile (net) 135,000 Gain on Exchange of Automobile 37,800

Princess Company

Machinery (new) 1,200,000 Accumulated Depreciation – Machinery (old) 340,000 Loss on Exchange of Machinery 190,000 Machinery (old) 850,000 Cash 880,000


42

5-8 (Urban Corporation)

Land Land

Improvements

Building Land purchase P2,000,000 Demolition of old building 300,000 Legal fees for land acquisition 150,000 Building permit fees P 80,000 Interest on loan for construction 270,000 Building construction costs 5,000,000 Assessment by the city government for sewer

connection

120,000

Landscaping costs* P350,000 Equipment purchased of use in excavation (cost – proceeds from sale) 800,000 – 640,000

160,000

Fixed overhead allocated to building

construction

100,000 Salvage from the demolished building (70,000) Total costs P2,500,000 P350,000 P5,610,000

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 anywhere 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 company’s negligence and could have been avoided had proper planning been done.

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

expenditure is permanent in nature. 5-9 (Doy Company)

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 50,000 Title guarantee insurance 20,000 Proceeds from sale of salvaged materials (10,000) Total P4,360,000


43

5-10 (Yu Corporation) Land

Improvements

Buildings Machinery and

Equipment Balances, December 31, 2011 P 10,000 P 900,000 P 980,000 Cost of fencing the property 110,000 Paid to a contractor for building erected 2,000,000 Building permit fee 20,000 Excavation expenses 50,000 Architect’s fees 50,000 Invoice cost of machines acquired 2,000,000 Freight, unloading and delivery charges 60,000 Custom duties and other charges 140,000 Allowances, etc. to technicians during installation

400,000

Balances, December 31, 2009 P120,000 P3,020,000 P3,580,000 The interest of P150,000 is an imputed interest and is not recognized anywhere in the financial

statements. The royalty payments of machines purchased are charged to operating expense for the period. Land account balance at December 31, 2012 is computed as follows (for discussion only): Cash paid P2,500,000 Mortgage assumed 4,000,000 Legal fees, taxes and documentation expenses 50,000 Payment to squatters to vacate premises 100,000 Cost of tearing down building 120,000 Salvage from old building demolished (150,000) Balance, January 1, 2012 700,000 Balance, December 31, 2012 P7,320,000

5-11 (Far East Company) a. Direct materials P220,000 Direct labor 150,000 Overhead costs (125% x 150,000 187,500 Allocated fixed costs (20% 700,000) 140,000 Total before interest cost P697,500 Capitalized interest: (300,000 x 10% x 6/12) (specific borrowing) 15,000 Total cost of equipment P712,500

b. Average accumulated expenditures: (697,500/2) P348,500 Capitalized interest: Specific borrowing 300,000 x 10% x 6/12 P 15,000 General borrowings 48,750 x 16% x 6/12 3,900 Total capitalized interest P 18,900 5-12 (Metro Company) a. 4,000,000 x 10% P400,000 Less interest income earned on temporary investment of loan ( 85,000) Capitalized interest P315,000


44

b. 1,000,000 x 10% P100,000 1,000,000 x 10% x 9/12 75,000 1,000,000 x 10% x 6/12 50,000 1,000,000 x 10% x 3/12 25,000 Total interest P250,000 Less interest income earned on temporary investment of loan 40,000 Capitalized interest P210,000

c. Computation of average accumulated expenditures: 400,000 x 12/12 P 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 ---------- Average accumulated expenditures P1,900,000

Computation of weighted average interest rate: (10% x 1,200,000) + (12% x 1,600,000) 11.14% 1,200,000 + 1,600,000 Interest of specific borrowing:

1,600,000 x 10% P160,000 Less interest earned 20,000 P140,000

Interest on general borrowing: 300,000 x 11.14% 33,420

Capitalized interest P173,420 d. 2,800,000 x 10% P280,000 1,600,000 x 10% 160,000 2,000,000 x 12% 240,000 Total interest on loans P680,000 Less capitalized interest: (1,900,000 x 10.625%*) 201,875 Interest expense for 2012 P478,125 * 680,000 ÷ 6,400,000 = 10.625% 5-13 (Lim Company) 360,000 x 12/12 P 360,000 600,000 x 7/12 350,000 1,500,000 x 6/12 750,000 1,500,000 x 1/12 125,000 Average accumulated expenditures P1,585,000 a. Interest of specific borrowing (3,000,000 x 12%) P 360,000 Less interest revenue earned from temporary investments of specific borrowing 49,000 Capitalized interest P 311,000 b. Interest on specific borrowing (1,200,000 x 12% ) P 144,000 Less interest revenue earned from temporary

investments of specific borrowing 49,000 P 95,000

Interest on general borrowings 385,000* x 12.14%** 46,739 Capitalized interest P 141,739 * 1,585,000 – 1,200,000 = 385,000 ** 680,000 ÷ 5,600,000 = 12.14%


45

5-14 (Alondra Corporation)

(a) Average accumulated expenditures: 4,000,000 x 12/12 P4,000,000 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 ------ Average accumulated expenditures P18,300,000 Average interest rate 12%(17,000,000) + 10%(12,000,000) + 12%(14,000,000) = 11.44% 17,000,000 + 12,000,000 + 14,000,000 Capitalized interest is 11.44% x P18,300,000 (lower than actual interest cost) = P2,093,520 (b) Total cost of buiding = Total construction cost + capitalized interest cost = P40,000,000 + P2,093,520 = P42,093,520

5-15 (Pifer Corporation) (a) Materials 1,250,000 Direct labor 250,000 Overhead 2,200,000 – (150% x 1,000,000) 700,000 Total 2,200,000 (b) Materials 1,250,000 Direct labor 250,000 Overhead (2,200,000 x 250/1,250) 440,000 Total 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) Unearned Income from Government Grant 147,500 Income from Government Grant 147,500 (2,950,000/20 years) (b) Property, Plant and Equipment Land 3,000,000 Less Unearned Income from Government Grant 2,802,500 197,500


46

Alternatively, the unearned income from government grant may be presented as part of the entity’s liabilities.

5-17 (Tan Company) a. 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 worked

720,000/100,000 hrs = 7.20/hr. 7.20 x 4,500 hrs = 32,400

7.20 x 5,500 hrs = 39,600

3. Units of output

720,000/900,000 units = 0.80/unit 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%

25% x 800,000 x 9/12=150,000 800,000-150,000=650,000 25% x 650,000 = 162,500

6. 150% DB

1.5/8 = 18.75% 18.75% x 800,000 x 9/12= 112,500

800,000-112,500=687,500 18.75% x 687,500) = 128,906

b. 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) a. Method 1 - Straight-line method Method 2 - Sum-of-the-years digits method 320,000 ÷ 80,000 = 4 year life 320,000 x 4/10 = 128,000 320,000 x 3/10 = 96,000 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 Sum-of-the-years digits method 320,000 x 2/10 64,000 150% declining balance method 37.5% x (340,000-127,500-79,688) 49,804 5-19 (Real Company) 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


47

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.

5-20 (Citi Company) a. Depreciation Expense for 2012 Double-declining balance method 800,000 x 25% x ½ P100,000 Sum-of-the-years digits method 720,000 x 8/36 x 1/2 80,000 Depreciation Expense for 2013 Double declining 700,000 x 25% P175,000 Sum-of-the-years’ digits method 720,000 x 8/36 x 1/2 P80,000 720,000 x 7/36 x ½ 70,000 P150,000

b. Carrying (book) value at December 31, 2013

Double-declining balance method Date Depreciation Expense for the year CV, end 12/31/12 800,000 x 25% X ½ = P100,000 P700,000 12/31/13 700,000 x 25% = 175,000 525,000 Sum of the years’ digit method Cost P800,000 Accumulated Depreciation, 12/31/13 (720,000 x 11.5/36) 230,000 Carrying value, 12/31/13 P 570,000 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 Accumulated Depreciation – Equipment (3,200 x 4) 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


48

Depreciation for 2013 (additional discussion) Components 1 – 3 = P16,000 Component 4 = 20,000/5 4,000 Total depreciation for P20,000

5-22 (Total Company) 1. The company changes to the sum-of-the-years digits method Cost P1,200,000 Less accumulated depreciation (1,100,000 ÷ 10) x 4 440,000 Carrying amount of the asset, beginning of 5th year P 760,000 Revised depreciation for the 5th year 760,000-100,000 = 660,000; 660,000 x 6/21 P 188,571

2. It was estimated that the asset’s remaining life is 5 years. Revised depreciation for the 5th year

(760,000 – 100,000) / 5 years P 132,000 5-23 (Chartered Company) Cost P 32,000 Less accumulated depreciation 30,000 x (5+4) / 15 18,000

Carrying amount, January 1, 2012 P 14,000 Depreciation expense for 2009 (14,000 x 7/28) P 3,500

5-24 (Standard Company) Cost P500,000 Less accumulated depreciation: 2008 20% x 500,000 100,000 2009 20% x 400,000 80,000 2010 20% x 320,000 64,000 2011 20% x 256,000 51,200 295,200 Carrying amount, January 1, 2012 P204,800 Depreciation expense for 2012 204,800 – 10,000 = 194,800; 194,800 ÷ 5 years P 38,960 5-25 (Koh Trading) Carrying amount of the asset, January 1, 2012 P153,600 Estimated remaining life in years ÷ 8 Depreciation expense for year ended December 31, 2012 P 19,200 5-26 (Carmi Company) Cost P378,000 Less: Accumulated Depreciation, August 1, 2012(378,000–35,000)/5 x 2 137,200 Carrying value, August 1, 2012 P240,800 Overhaul costs (capitalized) 80,000 Carrying value after overhaul P320,800 Depreciation (August – December 31, 2012 see below) 22,567 Carrying value, December 31, 2012 P298,233 Depreciation for 2012 (378,000 – 35,000)/5 x 7/12 P40,017 (320,800 – 50,000) / (5 – 2) + 2 = 270,800 / 5 x 5/12 22,567 Total P62,584


49

5-27 (Chu, Inc.) Accumulated depreciation at January 1, 2012 (528,000 x 4/8) P264,000 Revised depreciation expense for 2012 528,000-264,000 = 264,000; 264,000 / 2 yrs. 132,000 Accumulated depreciation at December 31, 2012 P396,000 5-28 (Lu Company) January 1, 2012

Impairment Loss – Machinery 131,250 Accumulated Depreciation 131,250 Cost P500,000 Accumulated Depreciation 1/1/12 168,750 Carrying value 1/1/12 331,250 Recoverable amount 200,000 Impairment loss P131,250

December 31, 2012

Depreciation Expense (200,000 – 20,000) /2 90,000 Accumulated Depreciation 90,000

5-29 (Island Souvenirs)

a. Value in use (1,500,000 – 700,000) x 3.7908 Residual value (500,000 x 0.6209)

3,032,640 310,450

3,343,090

b. Carrying value (9,000,000 – 1,500,000) 7,500,000 Recoverable amount (higher between 3,200,000 and 3,343,090)

3,343,090

Impairment loss 4,156,910

c. Revised annual depreciation (3,343,090 – 500,000) / 5 years 568,618

5-30 (Twin Head Corporation)

(a) Depreciation expense 2010 2011 5,600,000 / 16 years 350,000 350,000

(b) December 31, 2011 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 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


50

(c) Cost 10,000,000 Accumulated depreciation (4,400,000 + 700,000 – 2,100,000) 3,000,000 Carrying amount, December 31, 2011 7,000,000 To check: Limit on carrying value without impairment 10,000,000 x 14/20 7,000,000 (d) Depreciation expense for 2012 7,000,000 / 14 years 500,000

5-31 a.

01/01/10 Equipment 2,000,000 Revaluation Surplus 1,200,000 Accumulated Depreciation 800,000 3,600,000-2,400,000 = 1,200,000 (50% Inc.)

50% x 4,000,000 = 2,000,000 50% x 1,600,000 = 800,000

b. 12/31/10 Depreciation Expense 600,000 Accumulated Depreciation-Equipment 600,000 3,600,000 ÷ 6 yrs = 600,000 12/31/10 Revaluation Surplus 200,000 Retained Earnings 200,000 1,200,000 ÷ 6 yrs = 200,000 12/31/11 Depreciation Expense 600,000 Accumulated Depreciation-Equipment 600,000 12/31/11 Revaluation Surplus 200,000 Retained Earnings 200,000

c. 1/1/12 Accumulated Depreciation-Equipment 600,000 Revaluation Surplus 400,000 Equipment 1,000,000

12/31/12 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 1/1/10 1/1/10 2010

and 2011

12/31/11 1/1/12 1/1/12 12//31/12

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


51

5-32 (Samsung Company) 1/1/07 Machinery 3,600,000 Cash 3,600,000 12/31/07 Depreciation Expense (3,600,000/10) 360,000 Accumulated Depreciation 360,000 12/31/08 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

12/31/09 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 12/31/10 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 12/31/10 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

12/31/11 Depreciation Expense (2,010,000 / 6 years) 335,000 Accumulated Depreciation 335,000 12/31/12 Depreciation Expense 335,000 Accumulated Depreciation 335,000 Machinery 1,150,000 Accumulated Depreciation 690,000 Recovery of Previous Revaluation Loss (P & L) 100,000 Revaluation Surplus 360,000

Increase in asset value 460,000 Unrecovered revaluation loss Initial revaluation loss 150,000 Recovered through lower depreciation 150,000 / 6 = 25,000; 25,000 x 2 years 50,000 100,000 Revaluation surplus 360,000


52

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: Carrying value based on cost (no revaluation loss) (3,600,000 x 4 years) / 10 years 1,440,000 Revalued amount, 12/31/10 1,800,000 Revaluation Surplus 360,000

12/31/13 Depreciation Expense 1,800,000/4 450,000 Accumulated Depreciation 450,000 Revaluation Surplus (360,000 / 4 years) 90,000 Retained Earnings 90,000

5-33 (Coco Company) (a) Cost P300,000 Accumulated depreciation 12/31/11 300,000/10 x 2 ( 60,000) Carrying amount 12/31/11 before impairment P240,000 Recoverable amount 192,000 Impairment loss P 48,000 (b) Carrying value 12/31/11 after impairment P192,000 2012 depreciation (192,000/8) ( 24,000) Carrying amount 12/31/ 12 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 Previoius impairment P48,000 Recovered in 2012 (30,000 – 24,000) (6,000) Limit on recovery P42,000 Impairment recovery to be recognized at 12/31/12 P 42,000 5-34 (Lakers, Inc.) (a) Cost P100,000 Accumulated depreciation 12/31/09 100,000/10 ( 10,000) Net 90,000 Revalued amount 112,500 Revaluation surplus 12/31/09 P 22,500 (b) Carrying amount 12/31/11 112,500 x 7/9 P 87,500 Recoverable amount 67,375 Decrease in value P 20,125 Remaining balance of Revaluation Surplus (22,500 x 7/9) ( 17,500) Impairment loss in profit or loss P 2,625


53

(c) As of 1/1/12 P67,375 Depreciation expense for 2012 67,375/7 ( 9,625) Net before revaluation on 12/31/12 57,750 Revalued amount 73,000 Increase in value P15,250 Unrecovered impairment loss (2,625 x 6/7) ( 2,250) Revaluation surplus, December 31, 2012 P13,000 To check: CV without impairment, cost model 100,000 x 6/10 P60,000 Revaluation surplus, December 31, 2012 13,000 Revalued amount, December 31, 2012 P73,000 5-35 (Allied Company) Purchase price P4,450,000 Residual value ( 650,000) Development costs incurred and capitalized during 2010 750,000 Depletable cost 1/1/11 P4,550,000 Estimated supply of mineral resources ÷3,500,000 Depletion expense per ton in 2011 P 1.30 Number of tons removed during 2011 x 550,000 Depletion expense for 2009 P 715,000 Depletable cost, January 1, 2011 (see above) P4,550,000 Less depletion expense for 2009 ( 715,000) Add development costs incurred and capitalized during 2012 961,000 Depletable cost for 2012 P4,796,000 Revised estimated supply of mineral resource, 2012 ÷4,360,000 Revised depletion rate per ton P 1.10 Number of tons removed during 2012 700,000 Depletion expense for 2012 P 770,000 5-36 (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 2011 x 1,000,000 Depletion expense for 2011 P 4,165,800 Depletable cost, 2011 (see above) P41,658,000 Depletion expense for 2011 ( 4,165,800) Development costs in 2012 750,000 New depletable cost for 2012 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 Number of metric tons removed during 2012 x 1,500,000 Depletion expense for 2012 P 6,960,000


54

5-37 (Family Mining Company) Depletion rate per ton: 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 2,000 units x 6 months 12,000 Production cost per unit (8.00 + 3.00 + 0.20) x 11.20 Ending Inventory, December 31, 2011 P134,400 b. Cost of goods sold 18,000 units x 6 months 108,000 Production cost per unit x 11.20 Cost of goods sold for 2011 P1,209,600 c. Depletable cost in 2011 P4,200,000 Less depletion expense for 2011 20,000 units x 6 months 120,000 Depletion rate per ton x 3.00 360,000 New depletable cost for 2012 P3,840,000 Revised estimated recovery at January 1, 2012 ÷ 800,000 Revised depletion rate for 2012 P 4.80 Depreciable cost in 2011 P 280,000 Less depreciation expense for 2011 (120,000 units x 0.20) ( 24,000) Depreciable cost for 2012 P 256,000 Revised estimated recovery at January 1, 2012 ÷ 800,000 Revised depreciation rate for 2012 P 0.32 5-38 (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 Loss on Disposal of Assets 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


55

6. Equipment 150,000 Accumulated Depreciation-Equipment 15,000 Gain on Disposal of Assets 22,000 Equipment 40,000 Cash 103,000 7. Building 28,000,000 Cash 28,000,000

b. 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 (7) 28,000,000 Total 38,813,000 Total 2,000,000 Balance 36,573,000

5-39 (Pat Corporation) a. Depreciation and amortization expense for year ended December 31, 2012 Buildings 1.5/25 = 6%; (12,000,000-2,631,000) x 6% P 562,140 Machinery and Equipment Based on beginning balance (9,000,000 x 10%) 900,000 Less depreciation of machine destroyed 230,000 x 10% x 9/12 17,250 P 882,750 New machine 2,800,000 + 50,000 + 250,000=310,000 3,100,000 x 10% x 6/12 155,000 Total P1,037,750 Automotive Equipment Based on beginning balance 180,000 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

b. Gain ( loss) from disposal of assets Car traded in Fair value of car traded in (240,000 – 200,000) P 40,000 Book value of car traded 54,000 P(14,000) Machine destroyed by fire Insurance recovery P155,000 Book value of machine (230,000 x 4/10 ) 92,000 63,000 Net gain from disposal of assets P 49,000


56

MULTIPLE CHOICE QUESTIONS Theory MC1 D MC6 D MC11 D MC16 D MC21 C MC2 D MC7 D MC12 B MC17 C MC22 B MC3 C MC8 B MC13 B MC18 A MC23 C MC4 D MC9 C MC14 D MC19 B MC24 C MC5 A MC10 B MC15 D MC20 D MC25 C

Problems MC26 D MC27 B MC28 B MC29 D MC30 B MC31 D Cost is FV of trading securities exchanged = 1,000 x 34 = 34,000 MC32 D 14,400,000 x 5/20 = 3,600,000 MC33 C 200,000 + 3,000 + 6,000 = 209,000 MC34 D (800,000 – 20,000) x 12/78 x 9/12 = 90,000 MC35 C 780,000 x 11.25/78 = 112,500; 90,000 + 112,500 = 202,500

800,000 – 202,500 = 597,500 MC36 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 MC37 C 1,800,000 x 10% = 180,000; 180,000 – 45,000 = 135,000

2,500,000 – 1,800,000 = 700,000 700,000 x 9% = 63,000; 135,000 + 63,000 = 198,000

MC38 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

MC39 C 1,000,000 + (4,000,000÷ 2) = 3,000,000; 2,000,000 x 10% = 200,000 1,000,000 x 11% = 110,000; 200,000 + 110,000 = 310,000

MC40 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.

MC41 A 4,800,000 + 1,400,000 + 82,000 + 53,000 = 6,335,000 total cost 201,375 ÷ 6,335,000 = 3.18%

MC42 D 4,500,000 ÷ 40 yrs. = 112,500 MC43 C 77,000 x 6/36 = 12,833 MC44 A 240,000 – 12,000 = 228,000; 228,000 ÷ 120 mos = 1,900 per mo

1,900 x 63 mos = 119,700 240,000 – 119,700 = 120,300; 120,300 – 130,000 = 9,700

MC45 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

MC46 B 1.5/5 = 30% depreciation rate; 600,000 x 30% x ½ = 90,000 600,000 – 90,000 = 510,000; 510,000 x 30% = 153,000

MC47 A 90,000 x (5+4+3)/15 = 72,000 reported accum depreciation under SYD 90,000 x 2/15 = 12,000

MC48 B 240,000 ÷ 40 = 6,000; 240,000 x .90 x.90 x .10 = 19,440; 72,000 x 2/10 = 14,400 MC49 C 160,000/4 = 40,000; 400,000/40,000 = 10 years

240,000 – 40,000 = 200,000; 200,000 – 65,000 = 135,000 MC50 D (900,000 – 300,000) / 3 yrs = 100,000

600,000 + 100,000 = 700,000 MC51 A 900,000 – 420,000 = 480,000; 480,000 – 300,000 = 180,000


57

MC52 D 42,000 x 55 = 2,310,000; 2,310,000/7 = 330,000; 330,000 + 5,000 = 335,000 MC53 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 MC54 C 20,000 FV – cash received 3,000 = 17,000 cost;

40,000 – 30,000 = 10,000; 20,000 – 10,000 = 10,000 Gain MC55 B 20,500 – 6,000 = 14,500; 14,500 – 16,800 = 2,300 MC56 C 54,000,000 – 6,000,000 + 7,200,000 = 55,200,000; 55,200,000 ÷ 2,400,000 = 23 MC57 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 MC58 D P0 for Quarry No. 1 since the asset is only being leased.

1,000,000 – 300,000 = 700,000; 700,000 ÷ 100 M = 0.007 per ton 0.007 x 1,380,000 = 9,660

MC59 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

MC60 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

MC61 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

MC62 D 8,000,000 – 1,000,000 – 233,333 = 7,366,667 7,500,000 – 7,366,667 = 133,333

MC63 C 160,000 x 10 yrs = 1,600,000; 4,000,000 – 1,600,000 = 2,400,000 3,240,000 – 2,400,000 = 840,000

MC64 B 4,000,000 ÷ 160,000 = 25 years; 25 – 10 = 15 years remaining 3,240,000 ÷ 15 = 216,000

MC65 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 = 1,308,950 160,000 – 128,750 = 31,250; 500,000 – 31,250 = 468,750 1,308,750 – 468,750 = 840,000

MC66 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

MC67 D 70,000 ÷ 3.5 remaining years = 20,000; 70,000 – 20,000 = 50,000 MC68 C 1,800,000 – 600,000 = 1,200,000; 600,000 ÷ 3 = 200,000

1,200,000 + 200,000 = 1,400,000 MC69 C 3,000,000 – 300,000 = 2,700,000; 2,700,000 ÷ 10 = 270,000

270,000 x 4 = 1,080,000 3,000,000 – 1,080,000 = 1,920,000; 1,920,000 – 900,000 = 1,020,000

MC70 B 1,920,000 ÷ 6 yrs = 270,000 or 2,700,000 ÷ 10 yrs = 270,000

fin ac robles empleo Ch 5 Vol 1 Answers2012

Documents

Transcript of fin ac robles empleo Ch 5 Vol 1 Answers2012