Reference no: EM132980639
Questions -
Q1. KKK Corporation purchased a machine on January 1, 2016 by installment, 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.
A) How much is the cost of the machine upon acquisition?
- 2,800,000
- 2,500,000
- 3,000,000
- 2,300,000
B) How much is the depreciation expense for 2019?
- 312,500
- 112,500
- 156,250
- 187,500
Q2. HHH 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?
- 1,400,000
- 970,000
- 1,030,000
- 1,000,000
Q3. HHH 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?
- 432,600
- 370,800
- 535,600
- 659,200
Q4. LEU 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.
A) How much borrowing cost shall be capitalized?
- 1,100,000
- 580,000
- 1,200,000
- 1,140,000
B) What is the initial cost of the building?
- 10,080,000
- 10,640,000
- 10,700,000
- 9,500,000