Solution-What amount should be reported as a prior period

What amount should be reported as a prior period error

Reference no: EM133134824

Question 1 - Devera Furnitures Corp. was incorporated on January 1, 2020. In its audited financial statements for the year ended December 31, 2022, the Company used the following original cost and useful lives for its property plant and equipment.

Building 12,000,000 12 years

Machinery 9,000,000 10 years

Furniture 3,000,000 6 years

On January 1, 2023, the company decided to review the useful lives of the property, plant and equipment and consequently hired independent valuation experts who can certify the remaining useful lives of the property, plant and equipment. The results are as follows:

Building 10 years

Machinery 7 years

Furniture 4 years

The Company uses the straight line method of depreciation.

Required - What is the amount of depreciation expense for 2023?

a. P2,400,000

b. P2,175,000

c. P2,528,571

d. P5,742,857

Question 2 - On January 1, 2022, Diaz Company discovered that it had incorrectly expensed a P2,100,000 machine purchased on January 1, 2019. The entity estimated the machine's original useful life to be 10 years and the residual value at P100,000. The entity used the straight line method of depreciation and is subject to a 30% income tax rate.

In the December 31, 2022 financial statements, what amount should be reported as a prior period error?

a. P1,050,000

b. P1,029,000

c. P1,659,000

d. P1,680,000

Reference no: EM133134824

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What amount should be reported as a prior period error

Reference no: EM133134824

Reference no: EM133134824

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