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How much is the gain on the sale

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Q1. Ting Co. acquired a machine on January 2, 20x1 for P5,000,00. The machine has a useful life of 20 years and a residual value of P100,000. Ting Co. uses the double declining balance method of depreciation. In 20x8, a decision was made to change the depreciation method from the double declining balance to the sum-of-the-years' digits method. The origin estimate of useful life was unchanged; however, the machine residual value was changed to P200,000. The machine needs be refurbished for a total cost of P20,000 before it can be so at the estimated residual value of P200,000. How much is the depreciation in 20x8?

a. 294,865 b. 302,336 c. 315,926 d. 332.556

Q2. On January 1, 20x1, Pizzicato Co. acquired a machine for P20,000,000. Pizzicato Co. estimated a useful life of 10 years and a residual value of P1,000,000 and used the straight line method of depreciation. In 20x4, Pizzicato Co. changed the depreciation method to the sum-of-the-years' digits method, and the estimates of useful life and residual value to a remaining 5-year useful life and P800,000, respectively. On July 21, 20x6, Pizzicato Co. sold the machine for P4,500,000. Pizzicato Co. incurred selling costs of P50,000. Pizzicato Co. prorates full-year depreciation on the basis of the nearest month. How much is the gain (loss) on the sale?

a. 162,237 b. (162,237) c. 175,000 d. (175,000)

Q3. On January 1, 20x1, Farmer Dell Co. acquired a building for P22,000,000. Farmer Dell estimated a useful life of 25 years and a residual value of P2,000,000. Farmer Dell uses the straight line method of depreciation, and is subject to an income ta rate of 30%. On December 31, 20x6, Farmer Dell revalued the building and determined the following information:

Actual life 6 years

Remaining historical life 19 years

Total economic life 28 years

Remaining economic life 21 years

Replacement cost 30,000,000

Residual value 3,000,000

Farmer Dell opted to periodically transfer within equity a portion of the revaluation surplus on a piecemeal basis. How much are the carrying amounts of (1) the building and (2) the revaluation surplus on Dec. 31, 20x7?

a 23,250,000; 4,235,000

b. 22,285,714; 4,033,333

c. 21,367,921; 3,937,667

d. 20,985,618; 3.933333

Reference no: EM132931844

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