Scribd
Upload
68 views2 pages

Problem A: (PV Factor Is in Advance and Based On Implicit Rate) (Since PV of MLP Is at Least 90% of FMV, The Transaction

The document contains information about various accounting problems involving accruals, deferrals, and depreciation. Problem A includes account balances over multiple years with various adjustments. Problem B shows depreciation calculations for computer acquisitions over multiple years using the straight-line and SYD methods. Problem C calculates depreciation expense for the year using a 40% rate on computer hardware.

Uploaded by

Gloria Beltran
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
68 views2 pages

Problem A: (PV Factor Is in Advance and Based On Implicit Rate) (Since PV of MLP Is at Least 90% of FMV, The Transaction

The document contains information about various accounting problems involving accruals, deferrals, and depreciation. Problem A includes account balances over multiple years with various adjustments. Problem B shows depreciation calculations for computer acquisitions over multiple years using the straight-line and SYD methods. Problem C calculates depreciation expense for the year using a 40% rate on computer hardware.

Uploaded by

Gloria Beltran
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
You are on page 1/ 2

PROBLEM A

NI 6/30/12 NI 6/30/13 NI 6/30/14 RE,Beg. F.Y. 2014


P900,000 P570,000 P720,000

a. Unused supplies 6/30/12 22,000 (22,000)


Unused supplies 6/30/13 18,000 (18,000) P18,000
Unused supplies 6/30/14 14,000
Accrued utilities 6/30/12 (30,000) 30,000
Accrued utilities 6/30/13 (32,000) 32,000 (32,000)
Accrued utilities 6/30/14 (28,000)
Accrued interest expense 6/30/12 (10,000) 10,000
Accrued interest expense 6/30/13 (6,000) 6,000 (6,000)
Accrued interest expense 6/30/14 (2,000)

b. Insurance expense 6/30/12 75,000 75,000


Insurance expense 6/30/13 (30,000) (30,000)
Insurance expense 6/30/14 (30,000)

c. Sales in transit 6/30/12 (90,000) 90,000


Sales in transit 6/30/13 (130,000) 130,000 (130,000)
Sales in transit 6/30/14 (84,000)
Inventory, end 6/30/12 72,000 (72,000)
Inventory, end 6/30/13 100,000 (100,000) 100,000
Inventory, end 6/30/14 60,000

d. Rent expense, 6/30/14 50,000


Depreciation * (33,795)
Interest on lease liability ** (28,795)
Balances P939,000(1.) P526,000(2.) P687,410(3.) (P5,000)(4.)

*PV of MLP (P50,000x6.7590) P337,950 (PV factor is in advance and based on implicit rate)
Divide by: lease term 10 (since PV of MLP is at least 90% of FMV, the transaction
Is a finance lease)
Depreciation 33,795
CV of Warehouse 6/30/14 P 304,155

**Carrying value of Lease Liability 7/1/12 P287,950 (first payment made in advance)
Multiply by: Implicit lease rate 10%
Interest expense P 28,795

PROBLEM B

1.
Depreciation Expense
Computer acquisitions: 2011 2012 2013 Total
2011 (P90,000 x 90% / 5) P16,200 P16,200 P16,200 P48,600
2012 (P50,000 x 90% / 5) 9,000 9,000 18,000
2013 (P60,000 x 90% / 5) 10,800 10,800
TOTAL P16,200 P25,200 P36,000 P77,400
2.

2011 acquisition:
Cost P90,000
Less: Acc. Dep’n 12/31/13 48,600
Book value, 1/1/14 41,400
Less: Salvage Value (10% x P90,000) 9,000
Remaining depreciable cost 32,400
SYD rate x 2/3
Related Depreciation - 2014 P21,600

2012 acquisition:
Cost P50,000
Less: Acc. Dep’n 12/31/13 18,000
Book value, 1/1/14 32,000
Less: Salvage Value (10% x P50,000) 5,000
Remaining depreciable cost 27,000
SYD rate x 3/6
Related Depreciation - 2014 13,500

2013 acquisition:
Cost P60,000
Less: Acc. Dep’n 12/31/13 10,800
Book value, 1/1/14 49,200
Less: Salvage Value (10% x P60,000) 6,000
Remaining depreciable cost 43,200
SYD rate x 4/10
Related Depreciation - 2014 17,200

DEPRECIATION EXPENSE IN 2014 P52,300

3. No journal entry is necessary since this is a change in accounting estimate.

PROBLEM C

Cost of computer hardware P600,000


Less: Acc. Dep’n 12/31/13
(P600,000x40%) 240,000
Book value, 1/1/14 360,000
Less: Salvage value 60,000
Depreciation for 2014 P300,000

“Come to me, all of you who work hard and who carry heavy burdens and I will refresh you. Take my yoke
upon you and learn from me for I am gentle and humble of heart; and you will find rest. For my yoke is good
and my burden is light.” –Matthew 11:28-30

You might also like