Grant Company has acquired a machine and equipment on January 2, 2018. The cost of the machine (including installation cost and decommissioning cost), P80,000,000 and the cost of the equipment is P20,000,000. The machine produces chemical products that are sold to overseas customers. As a condition to operate the machine, regular inspection for faults is performed every year at a cost of P1,000,000. The life of the machine is 10 years while the equipment 5 years. The company uses the straight-line method of depreciation. On January 1, 2021, a cost was incurred to overhaul the machine at a cost of P4,000,000. After the overhaul, the machine is expected to produced twice as it was producing in the prior years. Also, a residual value of P1,200,000 is expected on this machine. What is the total carrying value of the manufacturing plant (machine, and equipment) as of December 31, 2021?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Grant Company has acquired a machine and equipment on January 2, 2018.
The cost of the machine (including installation cost and decommissioning
cost), P80,000,000 and the cost of the equipment is P20,000,000. The
machine produces chemical products that are sold to overseas customers. As
a condition to operate the machine, regular inspection for faults is performed
every year at a cost of P1,000,000. The life of the machine is 10 years while
the equipment 5 years. The company uses the straight-line method of
depreciation. On January 1, 2021, a cost was incurred to overhaul the
machine at a cost of P4,000,000. After the overhaul, the machine is expected
to produced twice as it was producing in the prior years. Also, a residual value
of P1,200,000 is expected on this machine.
What is the total carrying value of the manufacturing plant (machine, and
equipment) as of December 31, 2021?
Transcribed Image Text:Grant Company has acquired a machine and equipment on January 2, 2018. The cost of the machine (including installation cost and decommissioning cost), P80,000,000 and the cost of the equipment is P20,000,000. The machine produces chemical products that are sold to overseas customers. As a condition to operate the machine, regular inspection for faults is performed every year at a cost of P1,000,000. The life of the machine is 10 years while the equipment 5 years. The company uses the straight-line method of depreciation. On January 1, 2021, a cost was incurred to overhaul the machine at a cost of P4,000,000. After the overhaul, the machine is expected to produced twice as it was producing in the prior years. Also, a residual value of P1,200,000 is expected on this machine. What is the total carrying value of the manufacturing plant (machine, and equipment) as of December 31, 2021?
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