Reference no: EM132971107
Question - KINDLY PROVIDE CLEAR SOLUTION. THANK YOU!
Q1. On Nov. 5, 2019, AYE Company purchased a land and a building for a lump-sum amount of 5,500,000 from BEE Corporation. The land was purchased by BEE last October of 2015 for 1,750,000, and the building was constructed on February of 2016 for 4,000,000. The fair values of the land and building on the date of acquisition are 1,100,000 and 1,650,000, respectively. How much is allocated to land and building upon acquisition?
a. Land - 2,750,000; Building - 2,750,000
b. Land - 5,500,000; Building - 0
c. Land - 0; Building - 5,500,000
d. Land - 2,200,000; Building - 3,300,000
Q2. CEE Corporation purchased a machine on January 1, 2016 by instalment, initially paying 1,000,000, and a payment of 500,000 every December 31 is required for four (4) years. The selling price of the machine, if paid on cash basis, is 2,500,000. The residual value of the machine after its 4-year useful life is 200,000. The company used the double declining balance method in depreciating the machine. How much is the cost of the machine upon acquisition?
a) 2,300,000
b) 2,800,000
c) 2,500,000
d) 3,000,000
Q3. CEE Corporation purchased a machine on January 1, 2016 by instalment, initially paying 1,000,000, and a payment of 500,000 every December 31 is required for four (4) years. The selling price of the machine, if paid on cash basis, is 2,500,000. The residual value of the machine after its 4-year useful life is 200,000. The company used the double declining balance method in depreciating the machine. How much is the depreciation expense for 2019?
a. 312,500
b. 112,500
c. 187,500
d. 156,250
Q4. DEE Inc. purchased an equipment on March 31, 2019. The selling price of the asset is equal to its fair value at 1,400,000. The entity acquired the equipment by issuing 1,000 1,000 8% bonds, currently quoted at 103. At how much shall the equipment be initially measured?
a) 1,000,000
b) 970,000
c) 1,030,000
d) 1,400,000
Q5. DEE Inc. purchased an equipment on March 31, 2019. The selling price of the asset is equal to its fair value at 1,400,000. The entity acquired the equipment by issuing 1,000 1,000 8% bonds, currently quoted at 103. Provided that the entity is using the SYD method of depreciation, and the equipment's useful life is five (5) years with a 10% residual value based on its cost, what is the carrying value of the equipment as of December 31, 2020?
a. 432,600
b. 659,200
c. 370,800
d. 535,600
Q6. EEE Co. decided to construct a building to expand its operations. The entity decided to obtain a 5-year specific loan from EFF Bank for 10,000,000 at 12% on December 31, 2018, to finance the construction of the building. The construction started on January 2, 2019 and the building was completed on December 31 of the same year. Payments were made as follows: January 2 - 1,500,000; April 1 - 2,000,000; June 1 - 2,100,000; October 1 - 1,700,000; December 1 - 2,200,000. How much borrowing cost shall be capitalized?
a) 1,100,000
b) 1,140,000
c) 580,000
d) 1,200,000