Reference no: EM133180984

Questions -

Q1. Bergs Co. purchased two machines for P250,000 each on July 2, 2021. The machines were put into use immediately. Machine A has a useful life of five years and is solely used for one research project. Machine B will be used for two years on a research and development project and then used by another division for another eight years. Bergs uses the straight-line method of depreciation. What amount should Bergs include in 2021 as research and development expense?

Q2. On October 1, 2021, Knowl Company has a building with a cost of P4,000,000 and accumulated depreciation of P3,100,000. The company commits to a plan to sell the building by Feb. 1, 2022. On October 1, 2021, the building has an estimated selling price of P800,000 and it estimated that selling costs associated with the disposal of the building will be P120,000. On December 31, 2021, the estimated selling price of the building has increased to P1,200,000 with estimated selling costs remaining at P120,000. What amount of loss should Knowl Company recognize at the time the building was reclassified as held for sale?

Q3. On January 1, 2022, Bergs Corp owns 15,000 ordinary shares representing 15% of the shares outstanding of Knowie Corporation. The ordinary shares were acquired on November 12, 2021 at a cost of P750,000 and have a fair value of P800,000 on December 31, 2021. On January 2, 2022, Bergs sold half of its investment for P50 per share incurring a brokerage and commission expense of P10,000. How much is the gain on sale on January 2, 2022?