YANA Company has purchased a P10 PDF

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Summary

YANA Company has purchased a P10,400,000 mining property estimated to contain 8,000,000 tons of ore. The residual value of the property is P800,000.Building used in mine operations costs P800,000 and have estimated life of 15 years with no residual value. Mine machinery costs P1,600,000 with an esti...

Description

YANA Company has purchased a P10,400,000 mining property estimated to contain 8,000,000 tons of ore. The residual value of the property is P800,000. Building used in mine operations costs P800,000 and have estimated life of 15 years with no residual value. Mine machinery costs P1,600,000 with an estimated residual value P320,000 after its physical life of 4 years. Following is the summary of the company’s operation for first year of operations. Tons mined

800,000 tons

Tons sold

640,000 t ons

Unit selling price per ton

P4.40

Direct labor

P640,000

Miscellaneous mining overhead

P128,000

Operating expenses (excluding depreciation)

576,000

Inventories are valued on a FIFO basis. Aside from the depletion, the direct labor, overhead and depreciation related to production will be totaled to determine the cost of ores available for sale. Depreciation on the building is to be allocated as follows: 20% to operating expenses, 80% to production. Depreciation on machinery is chargeable to production. How much is the depletion for 2010? = 960000 (P10,400,000- P800,000)/8,000,000 tons x 800,000 tons produced Total inventoriable depreciation for 2010? =384000 Useful life of wasting asset (8,000,000/800,000 tons) 10 years Building depreciation - chargeable to production (800,000/ 8,000,000 x 800,000 tons produced x 80%) plus Equipment depreciation chargeable to production (1,600,000-320,000)/4 How much is the Inventory as of December 31, 2010? =422400Depletion 960,000 Depreciation

384,000

Direct Labor

640,000

Miscellaneous 128,000 Total cost

2,112,000

Cost of inventory (2,112,000/800,000 produced x 160,000 unsold tons)

How much is the cost of sales for the year ended December 31, 2010? = 1689600 Cost of goods sold (2,112,000/ 800,000 produced x 640,000 sold) How much is the maximum amount that may be declared as dividends at the end of the company’s first year of operations? 1302400 ZIA Company has developed a new machine that reduces the time required to insert the hair gels, toothpaste and lotions into their tubes. Because the process is considered to be very valuable to the cosmetics industry, Bryan had the machine patented. The following expenses were incurred in developing and patenting the machine: Research and development laboratory expenses

500,000

Metal used in construction of the machine

100,000

Blueprints to design the machine

45,000

Legal expenses to obtain the patent

75,000

Wages for employees work on the: research 300,000 and development and half their time in building the machine Expenses of drawings required by the patent office to be submitted

12,000

with the patent application Fees paid to the government patent office to process application

3,000

The patent cost to be capitalized by Bryan is = 90000 Legal expenses to obtain the patent

75,000

Expenses of drawings required by the patent office to be submitted

12,000

with the patent application Fees paid to the government patent office to process application

3,000

On January 2, 2002, Labiano Company purchased a patent for a new consumer product for P2,500,000. At the time of purchased, the patent was valid for 10 years. However, the patent’s useful life was estimated to be only 5 years due to the competitive nature of the product. On December 31, 2004, the product was permanently withdrawn from sale

under governmental order because of a potential health hazard in the product. What amount should Labiano charge against income during 2004, assuming amortization is recorded at the end of each year? = 1500000 Amortization for 2004 (2,500,000/5) Carrying amount of patent

500,000 1,000,000

On January 1, 2004, Hope Company capitalized a new word processing software package that it had developed. The total cost recorded was P6,000,000 and the product is expected to generate revenue for 3 years. Revenue from the sale of the software in 2004 was P15,000,000 and the total expected revenue for the 3 years is P60,000,000. The net realizable value of the software was P3,900,000 on December 31, 2004. What amount should be charged to software amortization expense for the year ended December 31, 2004? = 2000000 Cost 6,000,000 Amortization (6,000,000/3) 2,000,000 *revenue-based amortization is inappropriate unless circumstances permit The standard contains a rebuttable presumption that a revenue-based amortisation method for intangible assets is inappropriate. However, there are limited circumstances when the presumption can be overcome:  

The intangible asset is expressed as a measure of revenue; and it can be demonstrated that revenue and the consumption of economic benefits of the intangible asset are highly correlated. [IAS 38.98A]

SEAN Corporation incurred the following research and development costs during 2004 Design of tools, jigs, molds, and dies involving new technology

1,500,000

Modification of the formulation of a process

2,600,000

Trouble-shooting in connection with breakdowns during

1,000,000

commercial production Adaptation of an existing capability to a particular customer’s need as part of a continuing

1,400,000

commercial activity In its 2004 income statement, Layug should report research and development expense of =4100000 Design of tools, jigs, molds, and dies involving new technology

1,500,000

Modification of the formulation of a process

2,600,000

other items have already commercial production, thus, they are not considered as research and development Kian Company purchased Chan Company for P70,000,000 cash. A schedule of the market values of Chan’s assets and liabilities as of the purchase date is given below. Cash

500,000

Accounts receivable

8,000,000

Inventory

15,000,000

Property, plant, and equipment

45,500,000

Current liabilities

8,000,000

Noncurrent liabilities

12,000,000

What is the goodwill arising from the acquisition? = 21000000 Cash paid > Fair Value of net assets acquired = Goodwill Cash paid

70,000,000

MV of net assets

49,000,000...