Reference no: EM132630244

Question - The following questions are different with each other. This is all about depreciation of an asset.

Q1. On January 1, 2020, Chungking Company provided the following :Land costing 875,000 ; Building costing 7,500,000 with accumulated depreciation of 1,644,500 ; Machinery and equipment costing 2,250,000 with accumulated depreciation of 635,000. Building is depreciated using double declining balance method and has 25 years useful life. Machinery and equipment is depreciated using Straight line method with 10 years useful life. Land improvements is depreciated using Straight line method. On January 1, a plant facility consisting of land and building was acquired from another entity in exchange for 25,000 shares of WongKarWai Company. On this date, the share had a market price of P50. Current zonal values of land and building for property tax purposes are P150,000 and P600,000, respectively. On March 31, new parking lot, street and sidewalk at the acquired plant facility were completed at a total cost of P192,000. These expenditures had an estimated useful life of 12 years. On July 1, machinery and equipment were purchased at a total invoice cost of P340,000. Additional cost of P10,000 for delivery and P50,000 for installation were incurred. On November 1, a machine with a cost of P170,000 and a carrying amount of P29,750 at date of disposition was scrapped without cash recovery. What is the total depreciation for the current year?

Q2. On January 1, 2020, Marion Company reported the following property, plant and equipment: Land costing 350,000 ; Land improvement costing 180,000 with accumulated depreciation of 45,000 ; Building costing 4,500,000 with accumulated depreciation of 1,050,000 ; Machinery and equipment costing 1,160,000 with accumulated depreciation of 405,000 ; Automobile costing 1,800,000 with accumulated depreciation of 1,344,000 ; Land improvements are depreciated using Straight line with 15 years useful life. Building is depreciated using 150% declining balance with 20 years useful life. Machinery and equipment is depreciated using Straight line with 10 years useful life. Automobiles is depreciated using 150 % declining balance with 3 years useful life. On January 1, machinery and equipment were purchased at a total invoice cost P260,000, which included a P 10,000 charge for freight. Installation cost of P 40,000 was incurred. On June 30, a machine purchased for P60,000 two years ago was sold for P36,000. On December 31, the entity purchased a new automobile for P570,000 cash. What is the total carrying amount of the PPE on December 31, 2020?

Q3. De Niro Company used straight line depreciation. On January 1, 2016 the company purchased a new machine for P10,000,000, useful life 10 years, residual value P1,000,000. On January 1, 2018, the company decided that the original estimate of useful life should be reduced by 2 years. The residual value did not change. On January 1, 2019, the entity added an automatic guide and safety shield to the machine at a cost of P600,000. This addition did not change the useful life and residual value but it resulted in increase in production. What is the depreciation in 2019?

Q4. Fonda Company owned a building that appeared in the statement of financial position at the end of last year at the original P16,800,000 cost less P14,000,000 accumulated depreciation. The building had been depreciated on a straight line basis under the assumption that it would have a 30-year useful life and no residual value. During the first week in January of the current year, major structural improvements were completed on the building at a P5,000,000 cost. The improvements extended the expected life of the building for 10 years beyond the 30 years originally estimated. The improvements do not involve major replacement of parts.What is the depreciation for the current year?

Q5. Kingsley Company was incorporated on January 1, 2016. In preparing the financial statements for the year ended December 31, 2018, the entity used the following original cost and useful life for the property, plant and equipment : Original Cost/Useful life Building 30,000,000 /15 years ; Machinery 21,000,000 /10 years ; Furniture 7,000,000 / 7 years. On January 1, 2019, the entity determined that the remaining useful life is 10 years for the building, 7 years for the machinery and 5 years for the furniture. The entity used the straight line method of depreciation with no residual value. What total amount of depreciation should be recognized for the current year?

Q6. Duvall Company purchased a machine on July 1, 2019 for P12,000,000. The machine has an estimated useful life of five years and a residual value of P1,600,000. The machine is being depreciated by the 150% declining balance method. What amount should be recorded as depreciation expense on the machine for the calendar year 2020?

Q7. On January 1, 2019, Murray Abraham Company determined that a revision in the estimate associated with the depreciation of storage facilities was appropriate. The facilities, purchased on January 1, 2017 for P12,000,000, had been depreciated using the straight line method with residual value of P1,200,000 and useful life of 20 years. The entity has determined that the remaining useful life is 10 years and residual value is P1,600,000. What amount of depreciation should be recognized for the current year?

Q8. Hurt Company acquired a machine on October 1, 2017 at a cost of P5,000,000 and depreciated it at 25% per annum on a straight line basis. On October 1, 2019, the entity spent P1,000,000 on upgrade to the machine in order to improve its efficiency and increase the inflow of economic benefits over the machine's remaining useful life. What amount of depreciation should be recognized for the year ended September 30, 2020?

Q9. Douglas Company purchased a machine on January 1, 2016 for P7,520,000. The machine was estimated to have a useful life of five years and a residual value of P480,000. The entity used the sum of years' digits method of depreciation. At the beginning of 2019, the entity determined that the total useful life of the machine should have been four years and the residual value is P704,000. What amount should be recorded as depreciation for the current year?

Q10. Day-Lewis Company revealed the following depreciation policy on machinery and equipment: A full year depreciation is taken in the year of acquisition.  No depreciation is taken in the year of disposition.  The estimated useful life is five years. The straight line method is used. On June 30, 2019, the entity sold for P4,600,000 a machine acquired in 2016 for P8,400,000. The estimated residual value was P1,200,000. What amount of gain on disposal should be recorded in 2019?

Q11. Irons Company used straight line depreciation for the property, plant and equipment which consisted of the following at the end of each year. 2019 / 2020 Land 500,000 / 500,000 ; Building 3,900,000 / 3,900,000 ; Machinery and equipment 13,000,000/ 13,900,000 ; Accum depn 7,400,000 / 8,000,000. The depreciation expense for 2019 and 2020 was P1,000,000 and P1,100,000, respectively. What amount was debited to accumulated depreciation during 2020 because of property, plant and equipment retirement?

Q12. Irons Company used straight line depreciation for the property, plant and equipment which consisted of the following at the end of each year. 2019 / 2020 Land 500,000 / 500,000 ; Building 3,900,000 / 3,900,000 ; Machinery and equipment 13,000,000/ 13,900,000 ; Accum depn 7,400,000 / 8,000,000. The depreciation expense for 2019 and 2020 was P1,000,000 and P1,100,000, respectively. What amount was debited to accumulated depreciation during 2020 because of property, plant and equipment retirement?

Q13. Hopkins provided the following : Machine 1 has a depreciable amount of 1,000,000, residual value of 100,000 and 20-year useful life ; Machine 2 has a residual value of 40,000, depreciable amount of 360,000 and 15-year useful life; Machine 3 has a depreciable amount of 80,000 with no residual value and 5-year useful life. What is the composite life? What is the composite rate? (percentage form ; round off to 1 decimal place. example : 8.2%)

Q14. Pacino Company used the composite method of depreciation based on a composite rate of 25%. At the beginning of 2019, the total cost of equipment was P10,000,000 with a total residual value of P 1,200,000. The accumulated depreciation was P6,000,000 at that time. In January 2019, the entity purchased an equipment for P5,000,000 with no residual value. At the end of 2019, the entity sold an equipment with an original cost of P2,000,000 and a residual value of P400,000 for P700,000. This asset was acquired on January 1, 2017. What is the depreciation for 2019? What is the gain or loss from the derecognition of the asset on December 31, 2019?

Q15. Hanks Company provided the following information at year-end: 2020 / 2019 Building 50,000,000 / 50,000,000 ; Accumulated Depreciation 10,000,000 / 7,750,000. The entity did not acquire or dispose of any building during 2019. The straight line depreciation is used and the residual value is 10% of asset cost. What is the useful life of the building? What is the carrying amount of the building on December 31, 2021?