Reference no: EM132963804
Questions -
Q1. Carmel comp. provided the following information with respect to a building The building was acquired January, 2014 at a cost of P7,800,000 with an estimated useful life of 40 years and residual value of P200,000. Annual depreciation was computed on the straight line method.
The building was renovated on January 1, 2016 at a cost of p760,000. This was considered as improvement. Residual value did not change.
On January 1, 2019 the management decided to change the total life of the building to 30 years and use instead the double declining balance method.
a. What is the depreciation expense for Dec. 31, 2019?
b. What is the accumulated depreciation for Dec. 31, 2020?
c. What is the carrying amount/ book value of the assets as of Dec. 31, 2021?
Q2. On January 1, 2019 Kent Comp. purchased a machine for P5,000,000. The entity paid shipping expenses of P50,000 as well as installation cost of P120,000.
The machine was estimated to have a useful life of ten years, an estimated residual value of 300,000 and the double declining balance method is used.
In January 2021,, additions costing P360,000 were made to the machine in order to comply with pollution control ordinances. These additions neither prolonged the life of the machine nor did they have any residual value. In the same year the management decided to shift to straight line method of depreciation.
a. What is the depreciation expense for Dec. 31, 2021?
b. If the company. Sold the machine on Dec. 2022 for P3,500,000 how much gain or loss will they encountered.