Reference no: EM133108449

Question 1 - Janet Company purchased a machine on April 1, 2017 for P750,000. At that time, was determined that the machine had a estimated useful life of 10 years and an estimated residual value of P30,000. The company used the double-declining balance method of depreciation and it is the company's policy to provide full year depreciation in the year of acquisition and no depreciation in the year of disposal.

During 2021, after appropriate justification, the company changed its depreciation method to straight-line, at which time the machine's remaining useful life was estimated to be four years (including the current year) without residual value.

How much is the depreciation expense for the machine for the year 2021?

a. 61,440

b. 72,000

c. 76,800

d. 96,000

Question 2 - On January 1, 2018, the Danelle Company leased a portion of the commercial building owned by Joseph Commercial Company. The lease expires on December 31, 2025. Extensive work was done on the leased property for the construction of a restaurant considered as covid-19 safe. The improvements, costing P1,344,000, were completed on March 31, 2018. The estimated useful life of the improvement was 10 years.

During 2021, because of favorable business operations in the area, Danelle negotiated for the extension of the lease term by an additional 3 years, ending on December 31, 2028.

Danelle Company provides full year depreciation during the year of acquisition and no depreciation in the year of disposal.

How much is the depreciation expense on the leasehold improvements for the year ended December 31, 2021?

a. 120,000

b. 105,000

c. 168,000

d. 186,000