Reference no: EM133189032

Questions -

Q1) Diwata Company acquired equipment items during the past month with the following information:

Equipment 1 was purchased with an invoice price of P980,000 with a cash discount of 10%. The discount was taken. Freight charges amounted to P25,000. Diwata requested installation of the equipment, charging the entity P75,000.

Equipment 2 was purchased with an invoice price of P1,500,000 with a cash discount available at 5%. The discount was not taken. Accordingly, supplies to be used for Equipment 2 was also purchased amounting to P67,000.

How much is the total cost of Equipment 1 and Equipment 2?

a. 2,407,000

b. 2,482,000

c. 2,505,000

d. 2,580,000

Q2) On January 1, 2022, Torta Company obtained a loan amounting to P5,000,000 specifically to finance the construction of its new building. The interest rate related to borrowing is 12%. The proceeds of the loan were temporarily invested which earned an interest income of P100,000. How much is the capitalizable interest?

a. 480,000

b. 500,000

c. 600,000

d. 5,000,000

Q3) Borrowings made for the asset construction and other purposes are as follows:

Bank Loan, 12%, 5,000,000

Long-term note, 8%, 5,000,000

The asset construction was started on January 1 and ended at year end. Expenditures were as follows:

January 1, 5,000,000; March 31, 2,500,000; June 1, 3,000,000; August 1, 1,500,000; December 31, 500,000.

How much is the capitalizable borrowing cost?

a. 9,250,000

b. 925,000

c. 1,000,000

d. 75,000

Q4. An entity purchased an asset on Year 1 amounting to P500,000. The residual value amounts to P50,000 and the useful life is 5 years. Other information includes:

How much is the depreciation expense for year 2 if the entity depreciates based on useful hours?

a. 108,000

b. 99,000

c. 90,000

d. 207,000