Exercises 03 - PPE Intacc 2 PDF

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Module 3 Exercises Exercise 1 – Straight-line method On January 2, 2020, Mediena Corp. bought machinery under a contract that required a down payment of P10,000 plus twenty-four monthly payments of P5,000 each, for total payments of P130,000. The cash equivalent price of the machinery was P110,000. The machinery has an estimated; useful life of ten years and estimated residual value of P5,000. Mediena uses straightline depreciation. Required: What amount should Mediena report as depreciation for this machinery in 2020?

Exercise 2 – Straight-line method IVANA Manufacturing Co., a calendar-year company, purchased a machine for P650,000 on January 1, 2018. At the date of purchase, IVANA incurred the following additional costs: Loss on sale of old machinery P15,000 Freight cost 5,000 Installation cost 20,000 Testing costs prior to regular operation 4,000 The estimated salvage value of the machine was P50,000, and IVANA estimated that the machine would have a useful life of 20 years, with depreciation being computed using the straight-line method. Required: What amount of depreciation of the machine will be presented in the income statement in 2020 is:

Exercise 3 – Sum-of-the-year’s Digits Lucia Corp. uses the sum-of-the-years’ digits method to depreciate equipment purchased in January 2018 for P20,000. The estimated residual value of the equipment is P2,000 and the estimated useful is four years. Required: What should be the depreciation charge for the year ended 31 December 2020?

Exercise 4 – Double Declining Method Viktora Company purchased a machine in January 2, 2019, for P500,000. The machine has an estimated useful life of five years and a salvage value of P50,000. Depreciation was computed by the 200% declining balance method. Required: What should be the depreciation charge for the year ended 31 December 2020?

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Exercise 5 – 150% Declining Method On the first day of its current fiscal year, Serjes Corporation purchased equipment costing P400,000 with a salvage value of P80,000. Depreciation expense for the year was P160,000. Serjes uses the 150% declining balance method of depreciation. Required: What is the estimated useful life of the asset?

Exercise 6 – Working Hours Method Bongabon Corporation acquired a machine at a total cost of P5,200,000. The estimated life of the machine is 8 years or a total of 100,000 working hours with no salvage value. The operating hours of the machine totaled: 2019, 5,000 hours; 2020, 12,000 hours. The company follows the working hours method of depreciation. Required: On December 31, 2020, the carrying amount of the machine is:

Exercise 7 – Units of Production Method The Mamoan Company purchased a machine on 1 January 2019 For P81,000. The useful life of the machine is estimated at 3 years with a residual value at the end of this period of P6,000. During its useful life, the expected units of production from the machine are: 2019 12,000 units 2020 7,000 units 2021 5,000 units What should be the depreciation expense for the year ended 31 December 2020, using the most appropriate depreciation method permitted by PAS16 Property, plant and equipment?

Exercise 8 – Change in accounting estimate On January 2, 2017, Thancred Co. purchased a machine for P264,000 and depreciated it by the straight-line method using an estimated useful life of eight years with no salvage value. On January 2, 2020, Thancred determined that the machine had a useful life of six years from the date of acquisition and will have a salvage value of P24,000. An accounting change was made in 2020 to reflect the additional data. Required: Accumulated depreciation balance at December 31, 2020 is:

Exercise 9 – Change in accounting estimate. Fredericka Company purchased a tooling machine in 2010 for P3,000,000. The machine was being depreciated on the straight-line method over an estimated useful life of twenty years, with no salvage value. At the beginning of 2020, when the machine had been in use for ten years, the company paid P600,000 to overhaul the machine. As a result of this improvement, the company estimated that the useful life of the machine would be extended an additional five years. Required: What should be the deprecation expense recorded for the machine in 2020? Page 2 of 4...