1. On January 2, 2017, Greenwood Company purchased and placed in operation a machine estimated to have a 10-year life and no salvage value. The machine cost P600,000 and was depreciated on a...


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1. On January 2, 2017, Greenwood Company purchased and placed in operation a machine estimated to have a 10-year<br>life and no salvage value. The machine cost P600,000 and was depreciated on a straight-line basis. On December 27,<br>2020, a P60,000 device that increased the machine's output by one fourth was added to the machine. The new device<br>made no change in the rnachine's estimated life and salvage value. During the first week of January, 2024 the rnachine<br>was completely overhauled at a cost of P180,000. The overhaul added three additional years to the machine's estimated<br>life but did not change its salvage value.<br>Prepare entries in general form to record:<br>a) the purchase of the machine<br>b) the 2017 depreciation<br>c) the addition of the new device<br>d) the 2021 depreciation<br>e) overhauling of the machine<br>n the 2024 depreciation<br>

Extracted text: 1. On January 2, 2017, Greenwood Company purchased and placed in operation a machine estimated to have a 10-year life and no salvage value. The machine cost P600,000 and was depreciated on a straight-line basis. On December 27, 2020, a P60,000 device that increased the machine's output by one fourth was added to the machine. The new device made no change in the rnachine's estimated life and salvage value. During the first week of January, 2024 the rnachine was completely overhauled at a cost of P180,000. The overhaul added three additional years to the machine's estimated life but did not change its salvage value. Prepare entries in general form to record: a) the purchase of the machine b) the 2017 depreciation c) the addition of the new device d) the 2021 depreciation e) overhauling of the machine n the 2024 depreciation
2. Bradly Company's fixed asset and date of acquisition as of December 31, 2023 are:<br>Date Acquired/Used<br>Cost<br>P 560,000<br>Land<br>Jan 1, 2021<br>Building<br>Machinery<br>7,000,000<br>July 1, 2024<br>1,350,000<br>Oct 1, 2024<br>Depreciation methods and useful lives<br>Building.Double declining balance; 25 years, salvage value is 5% of cost<br>Machinery.Sum of years digit; 10 years<br>Depreciation is computed to the nearest month.<br>On June 1, 2026, machlnery was purchased at a total Involce cost of P456,000. Additional costs of P13,000 to rectify<br>damage on delivery and P18,000 for concrete embedding of machinery were incurred. A wall had to be demolished to<br>enable a large machine to be moved into the plant. The wall demolition cost P4,000 and rebuilding the wall cost<br>P20,000.<br>Determine the balances of the following for the year ended December 31, 2026.<br>a. Depreciation of building.<br>b. Depreciation of machinery.<br>3. Agata Mining Ventures, one of the largest mining company, purchased 20 acres of land for P60,000,000 in 2020. The<br>company expected to extract 5 million tons of mine from this land over the next 20 years at which time, residual value<br>shall be P3,000,000. The following costs were also incurred related to the mining activities during 2020: Successful<br>exploration cost, P5,000,000 and cost of P800,000 for dry wells. Operations started in the year 2021, during the first 2<br>years of the mine's operations, 300,000 tons and 400,000 tons were mined and sold for P80 per ton.<br>Required:<br>a) Entries to record the purchase of the land and other costs related to the mining activities in the year 2020.<br>b) Entries to record the depletion expense for the year 2021 and 2022.<br>

Extracted text: 2. Bradly Company's fixed asset and date of acquisition as of December 31, 2023 are: Date Acquired/Used Cost P 560,000 Land Jan 1, 2021 Building Machinery 7,000,000 July 1, 2024 1,350,000 Oct 1, 2024 Depreciation methods and useful lives Building.Double declining balance; 25 years, salvage value is 5% of cost Machinery.Sum of years digit; 10 years Depreciation is computed to the nearest month. On June 1, 2026, machlnery was purchased at a total Involce cost of P456,000. Additional costs of P13,000 to rectify damage on delivery and P18,000 for concrete embedding of machinery were incurred. A wall had to be demolished to enable a large machine to be moved into the plant. The wall demolition cost P4,000 and rebuilding the wall cost P20,000. Determine the balances of the following for the year ended December 31, 2026. a. Depreciation of building. b. Depreciation of machinery. 3. Agata Mining Ventures, one of the largest mining company, purchased 20 acres of land for P60,000,000 in 2020. The company expected to extract 5 million tons of mine from this land over the next 20 years at which time, residual value shall be P3,000,000. The following costs were also incurred related to the mining activities during 2020: Successful exploration cost, P5,000,000 and cost of P800,000 for dry wells. Operations started in the year 2021, during the first 2 years of the mine's operations, 300,000 tons and 400,000 tons were mined and sold for P80 per ton. Required: a) Entries to record the purchase of the land and other costs related to the mining activities in the year 2020. b) Entries to record the depletion expense for the year 2021 and 2022.
Jun 09, 2022
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