Reference no: EM133126048

Question 1 - On January 1, 2016, Japan Corp. purchased for P132,000 a machine to be depreciated by the straight-line method over the estimated useful life of eight years, without salvage value. On January 1, 2019, Japan determined that the machine has a useful life of six years from the date of acquisition without a salvage value. An accounting change was made in 2019 to reflect this data.

What is the accumulated depreciation balance at Dec. 31, 2019, after the appropriate adjusting entry for depreciation is made?

A. P88,000

B. P80,000

C. P77, 000

D. P73,000

Question 2 - South Korea Inc. has an equipment costing P700,000 with an estimated salvage value of P70,000 and an estimated useful life of six years. After using and depreciating the asset for the past two years, the company upgraded the machine parts and the cost of upgrading amounting to P120,000.

1. Assuming that the upgrading costs improved the quality of the asset's output, what is the revised depreciation expense for the third year using the straight-line method and the SYD method, respectively?

A. P135,000; P168,000

B. P135,000; P196,000

C. P152,500; P196,000

D. P152,500; P168,000

2. Assuming that the upgrading costs extended the asset's economic useful life by an additional two years, what is the revised depreciation expense using straight-line method and the SYD method, respectively?

A. P90,000; P140,000

B. P90,000; P120,000

C. P101,667; P140,000

D. P101,667; P120,000