Drill activity 18 answered PDF

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Summary

DRILLEXTRA CORPORATION is installing a new plant at its production facility. It has incurred these costs:Cost of plant (cost per supplier’s invoice plus taxes) 2,500, Initial delivery and handling costs 200, Cost of site preparation 600, Consultants used for advice on the acquisition of the plant 70...

Description

DRILL EXTRA CORPORATION is installing a new plant at its production facility. It has incurred these costs: Cost of plant (cost per supplier’s invoice plus taxes) 2,500,000 Initial delivery and handling costs 200,000 Cost of site preparation 600,000 Consultants used for advice on the acquisition of the plant 700,000 Interest charges paid to supplier of plant for deferred credit 200,000 (expense) Estimated dismantling costs to be incurred after 7 yrs 300,000 Operating losses before commercial production 400,000 Total costs that can be capitalized in accordance with PAS 16 is P4,300,000. KNIGHT COMPANY imported an equipment at a peso equivalent to P330,000. The company has to pay additional cost of importing the asset such as P10,000 import duties and refundable taxes of P15,000(receivable and should be nonrefundable tax to capitalized). Cost of bringing the asset and preparing for intended use include P2,000 transportation cost, P4,000 installation cost and testing and trial run cost. How much is the initial cost of new machine? P346,000 REPRIVE COMPANY acquired a machinery for P500,000. The credit terms were 2/10, n/30. What is the cost of machine assuming that the company uses gross method? Using net method? P490,000 CREDULUES COMPANY purchased equipment on January 1, 2014 under the following terms: a. P200,000 downpayment b. Five annual payments of P100,000, the first installment note to be paid on December 31, 2014. The same equipment was available at a cash price equivalent of P580,000. What is the cost of equipment? P580,000 UM COMPANY experienced the following transactions during the year: 1. Purchased machinery for P500,000 cash. P500,000 2. Purchased land and building for P6,000,000. An appraised indicated fair value as follows: Land 2,000,000 x 1.2=2,400,000 Building 3,000,000 3,600,000 TOTAL 5,000,000 6,000,000 6M/5M = 1.2 3. Land and building were acquired by using 60,000 shares of P100 per value. The shares is quoted at P150 on the date of exchange, and the assets acquired had the assessed value for tax purposes of 1,000,000 and 3,000,000, respectively. Land 1,000,000 x 1.5 = 1,500,000 Building 3,000,000 2,500,000 TOTAL 4,000,000 6,000,000 (60,000share x P100) 6M/4M 4. The entity acquired used machinery by using the seller a two-year, noninterest-bearing note for P3,000,000. In recent borrowing, the entity has paid a 12% interest for this type of note. The present value of 1 at 12% for 2 years is .80 and the present value of an ordinary annuity of 1 at 12% for 2 years is 1.69. P3,360,000

5. A certain equipment was donated by a shareholder to the entity. An independent appraisal of the equipment placed the fair value at P1,000,000 and the residual value of P100,000. Attorney’s fees and other legal expenses amounted to P25,000. P1,000,000 Equipment 1,000,000 Donated Capital 25,000 Donated Capital 1,025,000...