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provided. Provide solution to each question. Provide proper label. Box your final answer. NO
ERASURES. Submit a clean output. (5 points each item)
Deadline of Submission: September 26, 2022, 10:30 AM (Faculty Office)
1. During the year, Raymon Company made the following expenditures relating to plant
building:
Continuing and frequent repairs 40,000
Repainted the plant building 10,000
Major improvements to the electrical wiring system 32,000
Partial replacement of roof tiles 14,000
How much should be charged to repair and maintenance expense?
Solution:
Continuing and frequent repairs 40,000
Repainted the plant building 10,000
Partial replacement of roof tiles 14,000
Repair and maintenance expense 64,000

2. At the beginning of the current year, Aldrich Company purchased for P5,400,000, including
appraiser's fee of P50,000, a warehouse building and the land on which it is located. The land
has a current appraised value of P2,000,000 and the building P3,000,000. The original, cost on
the seller's book is P1,400,000 for the land and P2,800,000 for the building. What is the initial
measurement of the land?
Solution:
Assets Appraised Value Fraction Allocated Value
Land 2,000,000 2/5 2,160,000
Building 3,000,000 3/5 3,240,000
Total 5,000,000 5,400,000

3. On July 1, 2003 Emma Company purchased for P30,000,000 including an appraiser’s fee of
P1,000,000, a warehouse building and the land on which it is located. The following data were
available concerning the property:
Current appraised value Seller’s original cost
Land 5,000,000 3,750,000
Warehouse building 20,000,000 11,250,000
Emma Company should record the land at?
Solution:
Assets Appraised Value Fraction Allocated Value
Land 5,000,000 5/25 6,000,000
Warehouse building 20,000,000 20/25 24,000,000
Total 25,000,000 30,000,000

4. During the current year, Laica Company had the following transactions pertaining to its new
office building:
Purchase price of land 600,000
Legal fees for contract to purchase land 20,000
Architect fee 80,000
Demolition of old building on site 50,000
Sale of scrap from old building 30,000
Construction cost of new building fully completed 3,500,000
In the year-end statement of financial position, what amounts should be reported
respectively as cost of land and cost of building?
Solution:
Purchase price of land 600,000
Legal fees for contract to purchase land 20,000
Cost of land 620,000

Construction cost of new building fully completed 3,500,000

Architect fee 80,000
Demolition of old building on site 50,000
Sale of scrap from old building ( 30,000)
Cost of Building 3,600,000

5. On December 1, 2003, Ana May Company purchased a P5,000,000 tract of land for a
factory site. Ana May razed an old building on the property and sold the materials it salvaged
from the demolition. Ana May incurred additional costs and realized salvaged proceeds during
December 2003 as follows:
Cost of grading, leveling and landscaping 100,000
Demolition of old building to make room for new construction 50,000
Legal fees for purchase contract and recording ownership 150,000
Title guaranteed insurance 10,000
Proceeds from sale of salvaged materials 5,000
Cost of surveys before construction of new building 45,000
In its December 31, 2003 balance sheet, Ana May should report a balance in the land
account at?
Solution:
Track of Land 5,000,000
Cost of grading, leveling and landscaping 100,000
Legal fees for purchase contract and recording ownership 150,000
Title guaranteed insurance 10,000
Cost of surveys before construction of new building 45,000
Balance in the land account is 5,305,000

F6. Beaver Company purchased land and an existing usable building for P9,000,000. The fair
value of the building is P2,000,000. The entity paid P700,000 to immediately tear down the
building on the land to construct a new building for own use. Legal fees of P65,000 were paid
for making the purchase. Architect fees were P405,000. Liability insurance during construction
cost PI35,000 and excavation cost PI20,000. The contract price paid to the contractor for the
new building was P13,570,000. A one -time assessment made by the city for sidewalks was
P75,000. The entity installed lighting and signage at a cost of P110,000. What is the cost of
the new building?
Solution:
Demolition of Building 700,000
Architect fees 405,000
Insurance 135,000
Excavation Cost 120,000
New Building Cost 13,570,000
New Building Total Cost 14,930,000

7. On January 1, 2014, Karlo Company constructed a building costing P4,215,000. The

weighted-average accumulated expenditures on the building during 2014 was P3,900,000.
The entity borrowed P2,000,000 at 7.5% on January 1, 2014. Funds not needed for
construction were temporarily invested in short-term securities, and earned P59,0000 in
interest revenue. In addition to the construction loan, the entity had two other notes
outstanding during the year: a P1,500,000, 10-year, 10% note payable dated October 1, 2012,
and a 5-year P1,000,000, 8% note payable dated November 2, 2013. Construction was
completed on December 31, 2014 and the building is to leased out under an operating lease.
What is the initial cost of the building on December 31, 2014?
Solution:
Interest Expense ( 2,000,000 x 7.5%) 150,000
Interest Revenue 59,000
Interest Expense capitalized 91,000

Interest from 1,500,000 loan (1.5m x 10%) 150,000

Interest from 1,000,000 loan ( 1m x 8% ) 80,000
Total Interest 230,000

Interest rate = 230,000 / ( 1.5m + 1m ) 9.2%

Weighted- average Expenditures 3,900,000

Less: Specific Borrowings 2,000,000
Excess 1,900,000
Interest Rate 9.2%
Interest Expense capitalized 174,800

Total Capitalized ( 91,000 + 174, 800 ) 265,800

Constructed Building cost 4,215,000
Initial Cost of Building 4,480,800

8. During the year, Francisco Company purchased a machine for P 1,260,000 that was placed
in service at yearend. The entity incurred shipping cost P30,000, installation cost P40,000 and
testing cost P50,000 in relation to the machine. What amount should be reported as
machinery at year-end?
Solution:
Machine price 1,260,000
Shipping Cost 30,000
Installation cost 40,000
 Testing cost 50,000
Machinery cost 1,380,000

9. Lander Company purchased new machinery on account as well as incurring the following
cost:
Invoice price of the machinery 3,000,000
Cash discount not taken on the purchase 150,000
Freight on new machine 50,000
Cost of moving old machinery to a new location 20,000
Installation cost of new machine 30,000
Testing cost before new machine
was put into regular operation 40,000
Operating cost during the first month of regular use 300,000
What is the total cost of the new machinery?
Solution:
Invoice price of the machinery 3,000,000
Less: Cash Discount not taken on the purchase 150,000
Freight on new machine 50,000
Installation cost 30,000
Testing cost 40,000
Cost of New Machine 2,970,000

10. Libya Company has recently acquired a computer system for its central office in Cebu City.
Libya acquired a new computer with the following information:
List price 1,000,000
Trade discount 100,000
Removal of old computer 30,000
Concrete slab poured as a base for the new computer 80,000
Insurance in transit 10,000
Repairs incurred while in transit 5,000
Transportation costs 15,000
Purchase discount taken 5%
The cost of the new computer should be?
Solution:
List Price 1,000,000
Less: Trade discount 100,000
Total 900,000
Less: Purchase discount (900,000*5%) 45,000
Total 855,000
Concrete slab poured asa based for the new computer 80,000
Insurance in transit 10,000
Transportation cost 15,000
Cost of new computer 960,000

11. Debbie Company exchanged 20,000 P25 par value ordinary shares held in treasury for a
parcel of land to construct a new building. The treasury shares were acquired at a cost of P40
per share, and on the exchange date the ordinary share had a fair value of P50.The entity
received P60,000 for selling scrap when an existing building on the property was removed
from the site at a cost of P100,000. What is the initial cost of the land?
Solution:
Land (20,000*50) 1,000,000

12. Hazel Lyn Company uses the straight-line method of depreciation for its property, plant
and equipment. The related balances were:
December 31, 2004 December 31, 2003
Property, plant and equipment 50,000,000 60,000,000
Accumulated depreciation 12,000,000 10,000,000
During the year, equipment with a book value of P6,000,000 was sold and no acquisition of
property was made. What was the depreciation expense in 2004?
Solution:
2004 Accumulated depreciation 12,000,000
2003 Accumulated depreciation 10,000,000
2004 Depreciation 2,000,000

13. Jake Company purchased equipment on January 1, 2015 at an invoice price of P800,000,
with credit terms 5/10, n/30. Freight in costs of P25,000, testing and installation costs of
P40,000 and labor costs during regular production operations of P20,000 were also incurred
before the payment of the invoice on January 20, 2015. It was expected that the machine
could be used for 10 years, after which the residual value would be zero. The entity intend to
use the machine for only 8 years, however, after which it expects to be able to sell it for
P50,000. The straight line method is used. What is the carrying amount of this equipment
December 31, 2015?
Solution:
Equipment Invoice Price 800,000
Freight in cost 25,000
Testing and installation cost 40,000
Cost of Equipment 865,000
Less: Sellable amount 50,000
Depreciable amount 815,000
Divided: Intend to Use 8
Annual Depreciation 101,875
Less: Cost of Equipment 865,000
Carrying amount on 12/31/2015 763,125

14. On January 1, 2013, Pam Company acquired equipment to be used in the manufacturing
operations. The equipment has an estimated useful life of 10 years and an estimated residual
value of P50,000. The depreciation applicable to this equipment was P240,000 for 2015
computed under the sum of years' digits method. What was the acquisition cost of the
equipment?
Solution: SYD=10(10+1/2)
Depreciation 240,000 =55
 Depreciable amount= 240,000*(55/8) Useful Life = 10 - 2
= 1,650,000 =8
Add: Residual Value 50,000
Acquisition cost 1,700,000

15. Gianina Company takes a full year’s depreciation in the year of an assets acquisition, and
2004 no depreciation in the year of disposition. Data relating to one depreciable asset
acquired in 2003, with residual value of P900,000 and estimated useful life of 8 years, at
December 31, are:
Cost 9,900,000
Accumulated depreciation 3,750,000
Using the same depreciation method in 2003 and 2004, how much depreciation should
Gianina record in 2005 for this asset?
Solution: Useful Life= 8 - 2
Cost 9,900,000 =6
Less: Residual value 900,000
Depreciable amount 9,000,000
Divided: Useful life 6
Depreciation Expense on 2005 1,500,000
Full Name (LN, FN, MI): Rabia, Jomar S. Rating: _______
nd
Year and Section: 2 year / UI-FA1-BSA2-2 September 2022

16. Ronel Company purchased a machine on July 1, 2013 for P6,000,000. The machine has an
estimated useful life of five years and a residual value of P800,000. The machine is being
depreciated by the 150% declining balance method. For the year ended December 31, 2014
what amount should be recorded as depreciation expense?
Straight line rate (1/5) 20%
Fixed rate (150% x 20%) 30%
Year Particular Depreciation Acc. Dep Carrying Amount
6,000,000
2013 15% x 6,000,000 900,000 900,000 5,100,000
2014 30% x 5,100,000 1,530,000 2,430,000 3,750,000

17. Joshua Company purchased factory equipment which was installed and put into service on
July 1, 2015 at a total cost of P6,400,000. Residual value was estimated at P400,000. The
equipment is being depreciated over eight years by the double declining balance method.
What is the depreciation of the equipment for 2016?
Solution:
Straight line rate ( 1/ 8) 12.5%
Double declining rate ( 200% x 12.5% ) 25%
Year Particular Depreciation Acc. Dep. Carrying Amount
6,400,000
2015 12.5% x 6,400,000 800,000 800,000 5,600,000
2016 25% x 5,600,000 1,400,000 2,200,000 4,200,000

18. Eternal Company acquired an equipment on January 1, 2005. The asset has an estimate
useful life of 5 years. An employee has prepared a depreciation schedule for this equipment
using two methods, sum-ofyears digit method and double declining balance method, as
follows: Sum-of-years digit Double declining
2005 3,000,000 4,000,000
2006 2,400,000 2,400,000
2007 1,800,000 1,440,000
2008 1,200,000 864,000
2009 600,000 296,000
What was the acquisition cost of the equipment?
Solution: Sum-of-years digit Double declining
2005 3,000,000 4,000,000
2006 2,400,000 2,400,000
2007 1,800,000 1,440,000
2008 1,200,000 864,000
2009 600,000 296,000
Total 9,000,000 9,000,000

19. On December 31, 2006, before the books were closed, the management of Steelers
Company made the following determinations about its equipment. The equipment was
purchased on January 2, 2003 for P7,200,000. The equipment has a useful life of 10 years with
no residual value and was depreciated using the straight-line method. On December 31, 2006
an estimate revealed that the remaining useful life of the asset was 8 years. The method of
depreciation and the estimate of the residual value however did not change.
What is the depreciation of this equipment for 2006?
Solution:
Annual Deprecation of Equipment (7,200,000 / 10) 720,000
Year Depreciation Acc. Dep. Carrying amount
7,200,000
2003 720,000 720,000 6,480,000
2004 720,000 1,440,000 5,760,000
2005 720,000 2,160,000 5,040,000
Annual Depreciation of equipment on 2006 (5,040,000/ 5 )1,008,000
2006 1,008,000 3,168,000 4,032,000

20. On January 1, 2002, Angue Company purchased for P5,000,000 a machine with a useful
life of five years and no salvage value. The machine was depreciated by the straight-line
method. Angue changed to the sum-ofthe-years’ method on January 1, 2004. What should be
the depreciation expense on this machine for the year ended December 31, 2004?
Solution:
Annual Depreciation of Machine ( 5,000,000 / 5 ) 1,000,000
Year Depreciation Acc. Dep Carrying Amount
5,000,000
2002 1,000,000 1,000,000 4,000,000
2003 1,000,000 2,000,000 3,000,000
SYD = 3(3+1/2) = 6
Year Particular Depreciation Acc. Dep Carrying Amount
2004 3/6 x 3,000,000 1,500,000 3, 500,00 1,500,000