Reference no: EM132594383
Questions -
Q1. On January 1, 2019, the machinery account of Faith Company shows the following:
Machinery 1,465,000
Accumulated depreciation 439,500
Additional information:
a) The estimated life of machinery is 5 years with no salvage value. Straight line method is used.
b) On January 1, 2019, a machine purchased for P320,000 on January 1, 2018 was overhauled at a cost of P45,000. As a result, the company estimated that its original life of 5 years would be extended by one year.
c) On June 20,2019, a new machine was purchased at an invoice cost of P500,000. Additional costs of P13,600 for freight and P56,400 for installation and testing were incurred. The machine was put to use on July 1, 2019.
Compute the depreciation of machinery for the year 2019.
Q2. Solve the following problem on depletion applying the concepts on Chapter 32. You can submit a picture of your solution with encircled final answers or you can submit an excel file with detailed computations. I hope everyone can submit so I could gauge your understanding of this chapter.
An ore property was bought at P7,600,000. Its estimated contents were 4,000,000 units. The property will have a value of P400,000 after exhaustion of the ore.
Mining equipment bought amounted to P850,000 with an estimated life of 10 years and residual value of P50,000. The average production per year is 800,000 units.
The following are the production for the first four years: First year - 950,000 units; Second year - 1,000,000 units; Third year - none; Fourth year - 630,000 units
Compute the Depletion and Depreciation expense for each of the first four years. Show computations in good form.
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