Reference no: EM132930048

Questions -

Q1. On January 1, 2018, Famy Company signed an eight-year lease for office space. Famy has the option to renew the lease for an additional six-year period on or before January 1, 2024. During January 2020, Famy incurred the following costs:

General improvements to the leased premises with useful life of 10 years P5,400,000 Office furniture and equipment with useful life of 8 years 2,400,000 Moveable assembly line equipment with a useful life of 5 years 1,800,000

As of December 31, 2020, Famy's intention as to the exercise of the renewal option is uncertain. Full year depreciation of leasehold improvement is taken for the year 2020. In Famy's December 31, 2020 balance sheet, the accumulated depreciation of leasehold improvements should be

Q2. On January 2, 2017, Union Co. purchased a machine for P264,000 and depreciated it by the straight-line method using an estimated useful life of eight years with no salvage value. On January 2, 2020, the Union determined that the machine had a useful life of six years from the date of acquisition and will have a salvage value of P24,000. An accounting change was made in 2020 to reflect the additional data. The accumulated depreciation for this machine should have a balance of December 31, 2020.

Q3. On July 1, 2020, New Orleans Corporation purchased equipment at a cost of P340,000. The equipment has an estimated salvage value of P30,000 and is being depreciated over an estimated life of 8 years under the double-declining-balance method of depreciation. The depreciation to be recognized in 2020 is?

Q4. Natividad Company purchased a tooling machine in 2010 for P3,000,000. The machine was being depreciated on the straight-line method over an estimated useful life of twenty years, with no salvage value. At the beginning of 2020, when the machine had been in use for ten years, the company paid P600,000 to overhaul the machine. As a result of this improvement, the company estimated that the useful life of the machine would be extended an additional five years. What should be the depreciation expense recorded for the machine in 2020?

Q5. OKC Manufacturing Co., a calendar-year company, purchased a machine for P650,000 on January 1, 2018. On the date of purchase, OKC incurred the following additional costs: Loss on sale of old machinery P15,000 Freight cost 5,000 Installation cost 20,000 Testing costs prior to regular operation 4,000 The estimated salvage value of the machine was P50,000, and OKC estimated that the machine would have a useful life of 20 years, with depreciation being computed using the straight-line. In January 2020, accessories costing P48,600 were added to the machine to reduce its operating costs. These accessories neither prolonged the machine's life nor did they provide any additional salvage value. The depreciation to be recognized in 2020 is

Q6. On March 31, 2020, Shooter Corp. retired a machine used in manufacturing designer parts. The machine was acquired on May 1, 2017. A straight-line depreciation method was used. The asset had an estimated residual value of P20,000 and a five-year life. On December 31, 2019, the balance in the accumulated depreciation is P330,000. The machine was scrapped and the company did not receive a single consideration. Revaluation loss in retirement is?

Q7. On January 1, 2020, the historical balances of the land and building of Twang Company are: Cost Accumulated depreciation Land P 50,000,000 P 0 Building 300,000,000 90,000,000 The land and building were appraised on the same date and the revaluation revealed the following: Fair value Land P 80,000,000 Building 350,000,000 There were no additions or disposals during 2020. Depreciation is computed on a straight line. The estimated life of the building is 20 years. The depreciation of the building for the year ended December 31, 2020 should be?