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Find what is the carrying amount of the asset on december

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Reference no: EM132839607

Rafael Company purchased a jewel polishing machine for P3,600,000 on January 1, 2015 and received a government grant of P500,000 toward the capital cost. The accounting policy is to treat the grant as a reduction in the cost of the asset. The machine is to be depreciated on a straight-line basis over 8 years and estimated to have a residual value of P100,000 at the end of this period.

Problem 1: What is the depreciation of the machine for 2015?

a. 387,500

b. 500,000

c. 437,500

d. 375,000

Problem 2: What is the carrying amount of the asset on December 31, 2016?

a. 2,725,000

b. 2,350,000

c. 3,000,000

d. 2,250,000

Reference no: EM132839607

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