Explosib, Inc. acquired two units of equipment on December 31, 2021. The first equipment was purchased in exchange for a ten-year non-interest bearing note requiring annual payment of P1,000,000 every December 31 starting December 31, 2022. The second equipment was acquired by issuing a two-year P6,000,000 non-interest bearing note. The prevailing rate for notes of these types on December 31, 2021 was 12%. What is the total cost of the two units of equipment? Present value factor round to two (2) decimal places A . 10,130,000 B. 10,450,000 C. 11,130,000 D. 16,470,000
Explosib, Inc. acquired two units of equipment on December 31, 2021. The first equipment was purchased
in exchange for a ten-year non-interest bearing note requiring annual payment of P1,000,000 every
December 31 starting December 31, 2022. The second equipment was acquired by issuing a two-year
P6,000,000 non-interest bearing note. The prevailing rate for notes of these types on December 31, 2021
was 12%. What is the total cost of the two units of equipment? Present value factor round to two (2)
decimal places
A
.
10,130,000 B. 10,450,000 C. 11,130,000 D. 16,470,000
On July 1, 2021, Bulkeyno Inc. exchanged machine with Mawnteyn Company. Bulkeyno’s cost to the machine
was P576,000 with related
its book value.
Mawnteyn, on the other hand purchased the machine for P660,000. Carrying value as of the date of exchange
was P348,000. Bulkeyno paid Mawnteyn P90,000 for the difference in fair values of the two machines.
12) If the transaction had commercial substance, what was the amount to be recorded by Bulkeyno as the cost
of the asset acquired through exchange?
A
.
450,000 B. 396,000 C. 306,000 D. 258,000
13) If the transaction was one without commercial substance, what was the amount recorded by Mawnteyn as
the cost of the asset acquired through exchange?
A
.
450,000 B. 396,000 C. 306,000 D. 258,00
Leonicus Corp. has recently acquired a computer system for its central office in Cebu City. Determine the
acquisition cost of the new computer system given the following costs:
List price P152,000
Trade discount taken 56,000
Removal of old computer 16,000
Concrete slab poured as a base for the computer 43,200
Insurance in transit 1,920
Repairs incurred while in transit 4,800
Transportation costs 6,400
Purchase discount not taken 2%
A
.
145,600 B. 166,400 C. 160,800 D. 161,600
Tilt Company acquired land from Display Company which will be used as a plant site in exchange for
20,000 newly issued shares of Tilt’s ordinary shares. At the date of acquisition, Tilt’s ordinary shares had
a par value of P20 per share and a fair value of P30 per share. the fair value of the land was P500,000 when
Cooper acquired this 2 years ago. How much is the initial cost of the newly acquired land?
A
.
400,000 B. 500,000 C. 600,000 D. 200,000
1) A piece of machinery has marked price of P550,000. It was purchased under the term 15%, 10%, and 5%
discounts. The cost of freight and installation after deducting the P8,000 sales proceeds of the old
machinery which was replaced is P12,000. The new machinery shall be recorded at a cost of
A
.
411,712 B. 405,000 C. 419,712 D. 397,000
During the current year, Benguet Company purchased a secondhand machine at a price of P300,000. A
cash down payment of P50,000 was made and a two-year, non interest bearing note was issued for the
balance. Recent transactions involving similar machinery indicate that the used machine has a secondhand
market value of P240,000. A new machine would cost P400,000. The following costs were incurred on the
machine during the year:
Cost of removing the old machine 2,000
Cash proceeds form the sale of the old machine 1,200
Cost of spare parts purchased and set aside from breakdowns during the first two years of
normal use of the machine 20,000
Cost of labor to install the machine 4,000
Cost of testing the machine prior to use 1,800
Cost of hauling the machine from the vendor’s place of business to the company’s premises 5,000
Cost of repairing the damage to the machine when it was dropped during the installation 3,000
Repairs incurred during the first year of operations 6,000
Safety devices added to the machine to comply with the terms of the collective bargaining
agreement entered into with the employees’ union 12,000
Cost of training workers to operate the machine 1,500
Determine the amount to be capitalized as cost of the machine
A
.
292,800 B. 280,800 C. 272,800 D. 262,800
3) A machine has a cost of P60,000, has an annual depreciation of P12,000 and has accumulated depreciation
of P30,000 on December 31, 2021. On April 1, 2022, when the the machine has a fair value of P24,000, it
exchange for a similar machine with a fair value of P72,000 and the proper amount of cash is paid. The loss
to be recognize on exchange is
A
.
6,000 B. 3,000 C. 21,000 D. 0
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