Reference no: EM133128223

Questions -

Q1. On January 1, 2018, Jane Company purchased an equipment with an estimated useful life of 8 years. The equipment was expected to have a residual value of P20,000 at the end of its useful life. The sum-of-the-years digits method was used in computing depreciation. For the year ended December 31, 2021, the depreciation applicable to this equipment was P42,000. What was the acquisition cost of the equipment?

a. 378,000

b. 398,000

c. 302,400

d. 322,400

Q2. The following expenditures were incurred by an entity during 2021. A piece of land with a dilapidated building was acquired and immediately construction of a new building began. Upon completion of the building, the entity acquired several pieces of machinery for use in its operations.

Cash paid on purchase of land-P4,500,000

Mortgage assumed on the land bought-P5,000,000

Legal fees and title verification expenses-P50,000

Payment to squatters on the property to vacate the premises-P100,000

Demolition costs incurred-P80,000

Proceeds from sale of salvaged materials-P45,000

Paid to contractor for a building erected-P12,000,000

Building permit fees-P20,000

Excavation expenses-P50,000

Architect's fees-P150,000

Capitalized interest cost on building constructed-P18,000

What are the costs of Land and Building, respectively? Apply the principles prior to the amendments to PAS 16 that is effective on January 1, 2022.

a. 9,685,000 and 12,238,000

b. 9,650,000 and 12,273,000

c. 9,550,000 and 12,418,000

d. 9,550,000 and 12,373,000