REQUIRED: A. Based on the application of the necessary procedures and appreciation of the above data, you are to provide the answers to the following: 1. What is the gain on sale of truck on September 30? 2. What is the gain on sale of machinery on December 20? 3. What is the adjusted balance of the cost of property, plant and equipment as of December 31, 2022? 4. What is the total depreciation expense for the year ended December 31, 2022? 5. What is the carrying amount of the property, plant and equipment as of December 31, 2022? B. Show the lapsing schedule as of December 31, 2022. B. PROPERTY, PLANT AND EQUIPMENTGabaldon Company's property, plant and equipment and accumulated depreciation balances atDecember 31, 2021 are:Machinery and equipmentAutomobiles and trucksLeasehold improvementsDepreciation policy:a. Depreciation methods and useful lives:Cost Accumulated DepreciationP 367,500P1,380,000210,000432,000114,326108,000• Machinery and equipment - straight line; 10 years.• Automobiles and trucks 150% declining balance; 5 years, all were acquired after2017.Leasehold improvements - straight lineb. Depreciation is computed to the nearest month.c. Salvage values are immaterial except for automobiles and trucks which have estimated salvagevalues equal to 15% of cost.Additional information:a. Gabaldon entered into a 12-year operating lease starting January 1, 2019. The leaseholdimprovements were completed on December 31, 2018 and the facility was occupied onJanuary 1, 2019.b. On July 1, 2022, machinery and equipment were purchased at a total invoice cost ofP325,000. Installation cost of P44,000 was incurred.c. On August 30, 2022, Gabaldon purchased new automobile for P25,000.d. On September 30, 2022, a truck with a cost of P48,000 and a carrying amount of P30,000 onDecember 31, 2021 was sold for P24,500.e. On December 20, 2022, a machine with a cost of P17,000, a carrying amount of P2,975 ondate of disposition, was sold for P4,000.

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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REQUIRED:

A. Based on the application of the necessary procedures and appreciation of the above data, you
are to provide the answers to the following:
1. What is the gain on sale of truck on September 30?
2. What is the gain on sale of machinery on December 20?
3. What is the adjusted balance of the cost of property, plant and equipment as of
December 31, 2022?
4. What is the total depreciation expense for the year ended December 31, 2022?
5. What is the carrying amount of the property, plant and equipment as of December 31,
2022?
B. Show the lapsing schedule as of December 31, 2022.

B. PROPERTY, PLANT AND EQUIPMENT
Gabaldon Company's property, plant and equipment and accumulated depreciation balances at
December 31, 2021 are:
Machinery and equipment
Automobiles and trucks
Leasehold improvements
Depreciation policy:
a. Depreciation methods and useful lives:
Cost Accumulated Depreciation
P 367,500
P1,380,000
210,000
432,000
114,326
108,000
• Machinery and equipment - straight line; 10 years.
• Automobiles and trucks 150% declining balance; 5 years, all were acquired after
2017.
Leasehold improvements - straight line
b. Depreciation is computed to the nearest month.
c. Salvage values are immaterial except for automobiles and trucks which have estimated salvage
values equal to 15% of cost.
Additional information:
a. Gabaldon entered into a 12-year operating lease starting January 1, 2019. The leasehold
improvements were completed on December 31, 2018 and the facility was occupied on
January 1, 2019.
b. On July 1, 2022, machinery and equipment were purchased at a total invoice cost of
P325,000. Installation cost of P44,000 was incurred.
c. On August 30, 2022, Gabaldon purchased new automobile for P25,000.
d. On September 30, 2022, a truck with a cost of P48,000 and a carrying amount of P30,000 on
December 31, 2021 was sold for P24,500.
e. On December 20, 2022, a machine with a cost of P17,000, a carrying amount of P2,975 on
date of disposition, was sold for P4,000.

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