Citi Company purchased factory equipment on March 10, 2019. The company accountant revealed the following information regarding this asset: Purchase price – P1,600,000; Residual value – 100,000; Estimated useful life – 8 years. The equipment was sold on November 30,2022 for P300,000. Required: a) What amount should Citi record as depreciation expense for the year ended December 31, 2019 using double-declining balance method, assuming the company had the policy of recording half year depreciation in the year of acquisition? b) What was the gain or loss on the sale of the equipment in 2022, assuming that Citi used the straight-line method of depreciation and had the policy of computing depreciation to the nearest full month?

Citi Company purchased factory equipment on March 10, 2019. The company accountant revealed the following information regarding this asset: Purchase price – P1,600,000; Residual value – 100,000; Estimated useful life – 8 years. The equipment was sold on November 30,2022 for P300,000. Required: a) What amount should Citi record as depreciation expense for the year ended December 31, 2019 using double-declining balance method, assuming the company had the policy of recording half year depreciation in the year of acquisition? b) What was the gain or loss on the sale of the equipment in 2022, assuming that Citi used the straight-line method of depreciation and had the policy of computing depreciation to the nearest full month?

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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