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How much are the depreciation expense and carrying amount

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Reference no: EM132715421

AJ Company acquires equipment on January 1, 2020. Information on costs is as follows:

Purchase price, gross of P10,000 trade discount 800,000

Non-refundable purchase taxes 20,000

Delivery and handling costs 40,000

Installation costs 30,000

Present value of decommissioning & restoration costs 10,000

Required:

Question 1. How much is the initial cost of the equipment?

Question 2. Assume the equipment has a useful life of 10 years and a residual value of P90,000. AJ Company uses the straight line method of depreciation. How much are the depreciation expense in 2020 and the carrying amount of the equipment on December 31, 2021, respectively? (Cost Model)

Question 3. Assume the equipment has a useful life of 10 years and a residual value of P90,000. AJ Company uses the straight line method of depreciation. On December 31, 2021, AJ Company revalues the equipment at a fair value of P820,000. There is no change in the residual value and the remaining useful life of the asset. How much are the revaluation surplus on December 31, 2021 and the revised depreciation expense in 2022, respectively?

Reference no: EM132715421

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