Property, Plant and Equipment (Part2) Answer and Solution 1. Reveille, Inc., purchased Machine #204 on April 2021, and placed the machine intoproduction on April 3, 2021. The following information is relevant to Machine #204:PriceP60,000Freight-in costs2,500Preparation and installation costs3,900Labor costs during regular production operation10,200Credit terms2/10, n/30Total productive output138,500 unitsThe company expects that the machine could beused for 10 years, after which the salvagevalue would be zero. However, Reveille, Inc., intends to use the machine only eight years,after which it expects to be able to sell it for P9,800. The invoice for Machine #204 was paidApril 10, 2021. The number of units produced in 2021 and 2022 were 23,200 and 29,000,respectively. Reveille computes depreciation to the nearest whole month.RequiredCompute the depreciation for the years indicated, using the following methods (round youranswer to the nearest peso):1. 2021: Units of productions2. 2022: Sum-of-the-years'- digits method2. The Nickle Company purchased an asset for P17,000 on January 2, 2021. The asset hasan expected residual value P1,000. The depreciation expense for 2021 and 2022 is shownnext for three alternative depreciation methods:YearMethod AMethod BMethod C2021P4,000P6,400P6,37520224,0004,8003,984Required1. Which depreciation method is the company using in each example?2. Compute the depreciation expense for 2023 and 2024 under each method3. On January 1, 2021 the Emming Corporation purchased some machinery. The machineryhas an estimated life of 10 years and an estimated residual value of P5, 000. The depreciationon this machinery was P20,000 in 2023.RequiredCompute the acquisition cost of the equipment under the following depreciation methods:1. Straight-line2. Sum-of-the-years'-digits3. Double-declining-balance

Depreciation is the reduction is the book value of asset due to change in technology, use of asset…

2. The Nickle Company purchased an asset for P17,000 on January 2, 2021. The asset has an expected residual value P1,000. The depreciation expense for 2021 and 2022 is shown next for three alternative depreciation methods: Year Method A Method B Method C 2021 P4,000 P6,400 P6,375 2022 4,000 4,800 3,984 Required 1. Which depreciation method is the company using in each example? 2. Compute the depreciation expense for 2023 and 2024 under each method 3. On January 1, 2021 the Emming Corpoation purchased some machinery. The machinery has an estimated life of 10 years and an estimated residual value of P5, 000. The depreciation on this machinery was P20,000 in 2023. Required Compute the acquisition cost of the equipment under the following depreciation methods: 1. Straight-line 2. Sum-of-the-years'-digits 3. Double-declining-balance

2. The Nickle Company purchased an asset for P17,000 on January 2, 2021. The asset has an expected residual value P1,000. The depreciation expense for 2021 and 2022 is shown next for three alternative depreciation methods: Year Method A Method B Method C 2021 P4,000 P6,400 P6,375 2022 4,000 4,800 3,984 Required 1. Which depreciation method is the company using in each example? 2. Compute the depreciation expense for 2023 and 2024 under each method 3. On January 1, 2021 the Emming Corpoation purchased some machinery. The machinery has an estimated life of 10 years and an estimated residual value of P5, 000. The depreciation on this machinery was P20,000 in 2023. Required Compute the acquisition cost of the equipment under the following depreciation methods: 1. Straight-line 2. Sum-of-the-years'-digits 3. Double-declining-balance

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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