Reference no: EM132566108
Question - Entity A acquires equipment on January 1, 20x1. Information on costs are as follows:
Purchase price, gross of 10,000 trade discount, 800,000
Non-refundable purchase taxes 20,000
Delivery and handling costs 40,000
Installation costs 30,000
Present value of decommissioning and restoration costs 10,000
Assume the equipment has a useful life of 10 years and a residual value of 90,000. Entity A uses the straight line method of depreciation. How much are the depreciation expense in 20x1 and the carrying amount of the equipment on December 31, 20x2, respectively?
a. Depreciation Expense - P80,000; Carrying amount 12/31/x2 - P810,000
b. Depreciation Expense - P80,000; Carrying amount 12/31/x2 - P580,000
c. Depreciation Expense - P80,000; Carrying amount 12/31/x2 - P640,000
d. Depreciation Expense - P80,000; Carrying amount 12/31/x2 - P730,000
e. Answer not given