What is the carrying amount of machinery at December

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Reference no: EM132788247

Questions -

Q1. On July 1, 2020, Manuel Corporation purchased machinery worth P 8,000,000.

Terms: P 500,000 down payment, the balance on three equal annual payments every July 1 of each year. The cash price of the machinery is P 6,000,000. A promissory note is issued for the installment balance.

What is the carrying amount of machinery at December 31, 2020?

Q2. Chot acquired a tract of land with an existing building in exchange for 20,000 ordinary shares of P 10 par value with a market price of P 20 per share on the date of acquisition. The last tax bill assessed value of P 200,000 for the land and P 120,000 for the building. However, the land has a fair value of P 550,000 and the building has no determinable fair value. Shortly, after acquisition, the building was razed at a cost of P 9,000 in anticipation of a new building construction.

What is the cost assigned to land?

Assuming the fair value of the land is not available, what would be the cost of the land?

Q3. On January 1, 2020, ABC Company obtained a loan of P 4,000,000 at an interest rate of 10% specifically to finance the construction of its new building. Availments from the loan were made quarterly in unequal amounts. Total borrowing cost amounted to P 250,000. Prior to their disbursements, the proceeds of the loan were temporarily invested and earned interest income amounting to P 40,000. The building was completed on December 31, 2020.

The amount of capitalizable borrowing costs is?

Q4. During 2020, Dual Company incurred P 4,000,000 in exploration cost for each of 15 oil wells drilled in 2020. Of the 15 wells drilled, 10 were dry holes. The entity used the successful effort method of accounting. The entity depleted 30% of the oil discovered in 2020.

What amount of exploration cost should be reported in the December 31, 2020 statement of financial position?

Q5. Bergen Company purchased factory equipment which was installed and put into service January 1, 2019 at a total cost of P 1,280,000. Residual value was estimated at P 80,000. The equipment is being depreciated over eight years by the double declining balance method.

For the year 2020, how much depreciation expense should be recorded on the equipment?

Q6. On July 1, 2020, Manuel Corporation purchased machinery worth P 8,000,000. Terms: P 500,000 down payment, the balance on three equal annual payments every July 1 of each year. The cash price of the machinery is P 6,000,000. A promissory note is issued for the installment balance.

What would be the journal entry to record the acquisition of machinery?

What would be the journal entries to record the amortization at December 31, 2020?

Reference no: EM132788247

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