PROBLEM 1

On October 1, 2020, ABC Corporation purchased land and building at a basket price of P 30,000,000. A check wa
are P 12,000,000 and 24,000,000, respectively.
1. What would be the journal entry to record the acquisition?

Account Names Debit

Land 10,000,000.00
Building 20,000,000.00
Cash

PROBLEM 2
On October 1, 2020, Hello Company purchased equipment and furniture at a total cost of P 100,000. The relativ

1. What would be the journal entry to record the acquisition?

Account Names Debit

Equipment [(P 100,000 x 97%) +20,000] x75/125 70200
Furniture [(P 100,000 x 97%) +20,000] x50/125 46800
Accounts Payable (100,000 x 97%)
Cash

PROBLEM 3
On July 1, 2020, Manuel Corporation purchased machinery worth P 8,000,000. Terms: P 500,000 down paymen
P 6,000,000. A promissory note is is
Required:
1. What would be the journal entry to record the acquisition of machinery?
2. What would be the journal entries to record the amortization at December 31, 2020?
Date Account Names
1/7/2020 Machinery
Discount on Notes Payable
Notes Payable
Cash

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

Date Account Names

12/31/20 Interest Expense 333,333.33
Discount on Notes Payable

PROBLEM 5 (Adapted from Auditing Textbook)

On January 1, 2020, Marcus Company acquired a machinery with a fair value of P 1,900,000 by issuing a 4-year,

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

Date Account Names

1/1/2020 Machinery (at present value)
 Premium on Bonds Payable
Bonds Payable

PROBLEM 6 (Adapted from Auditing Textbook)

On December 15, 2020, Tenorio Company amd Jason Company exchanged equipment. The following data are a
Eye You
Tenorio Jason
Equipment (cost) 500,000 300,000
Accumulated Depreciation 300,000 50,000
Fair value of Equipment 180,000 220,000
Cash paid by Tenorio to Jason 40,000 40,000

1. What is the journal entry to record the transaction in the books of Tenorio?

Date Account Names

12/15/2020 Equipment - new
Accumulated Depreciation
Loss on Exchange
Equipment - old
Cash

2. What is the journal entry to record transaction in the books of Jason?

Date Account Names

12/15/2020 Equipment - new
Accumulated Depreciation
Loss on Exchange
Cash
Equipment - old
price of P 30,000,000. A check was issued upon receipt of the land title. At the time of acquisition, the relative fair values of land and bu

Credit
36,000,000.00

30,000,000.00

tal cost of P 100,000. The relative sales values of these two properties at acquisition date are P 75,000 and P 50,000, respectively. Inw

Credit
117000

97000
20000

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

Debit Credit
6,000,000
2,000,000
7,500,000
500,000

Debit Credit

nt on Notes Payable 333,333.33

P 1,900,000 by issuing a 4-year, 12%, P 2,000,000 bonds. Principal is due on December 31, 2023 but the interest is due annually at the

Debit Credit
2,126,776
m on Bonds Payable 126,776
2,000,000

pment. The following data are available on the exchange. The exchange is with commercial substance,

Debit Credit ASSET- TENORIO

220,000 220,000
300,000
20,000
500,000
40,000

Debit Credit ASSET - JASON

180,000 220,000
50,000
30,000
40,000
300,000
e fair values of land and building

50,000, respectively. Inward related costs paid by entity was P 20,000. Term of purchase is 3/10, n/90.

e cash price of the machinery is

rest is due annually at the end of each year. The prevailing market rate of interest for a similar instrument on January 1, 2020 is 14%. T
n January 1, 2020 is 14%. The present value of the future cash flows from the bonds discounted at 10% is P 2,126,776.
 On July 1, 2020, Manuel Corporation purchased machinery worth P 8,000,000. Terms: P 500,000 down payment, the balanc
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
balance. 1. What is the carrying amount of machinery at December 31, 2020?

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 p
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
of P 9,000 in anticipation of a new building construction. 1. What is t
         
2. Assuming the fair value of the land is not available, what would be the cost of the land

ASSET - TENORIO
ASSET -JASON
SCRIBD DIN
00 down payment, the balance on three equal
promissory note is issued for the installment
mber 31, 2020?
6.5M TEMPORARY

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
0,000 and the building has no determinable fair value. Shortly, after acquisition, the building was razed at a cost
ding construction. 1. What is the cost assigned to land?

LAND 550,000.00 COST ASSIGNED

LAND 20,000.00 OS
20.00 MARKET PRICE
400,000.00 COST OF LAND

ASSET - TENORIO 220,000.00

ASSET -JASON 220,000.00

NASA CRIBD ITO PROBLEM 7

LAND 322,000.00
BUILDING 1,044,000.00
MACHINERY 317,032.00

LAND AND BUILDING AP

OPTIONS
LIST PRICE OF MACHINERY
FREIGHT ON MACHINERY PRUCHASED
REPAIR TO MACHINERY
COST OF REMOVING OLD MACHINE
DRIVEWAYS AND SIDEWALKS
BUILDING REMODELING
UTILITIES PAID SINCE ACQ. OF BUILD.
960,000.00
16,000.00
318,400.00
5,000.00
1,480.00
4,800.00
102,000.00
400,000.00
 20,800.00
1,828,480.00
 price
Title
Legal fees
tax

Building
Interest
razing
proceeds

grading
driveway
parking

Actual Interest on spec.

Less: Interest earned

210,000.00

10.00
2020 1,600,000.00
2021 1,200,000.00
2,800,000.00
 0.25

2019
2020
 925,000.00
7,500.00
5,000.00
15,000.00
952,500.00

3,100,000.00
60,000.00
42,500.00
- 6,000.00
3,196,500.00

45,000.00
400,000.00
60,000.00
505,000.00

400,000.00

1,700,000.00
1,280,000.00 320,000.00
240,000.00