How much is the cost of th
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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How much is the cost of the machinery?

Transcribed Image Text:Problem 26-22 (IAA)
1. The old machine, which was removed in the installation of
On December 31, 2020, Scarce Company showed the following
10% of P1,286,000 128,600
account for machinery that it has assembled for own use.
An analysis of the details in the account disclosed the following
Cost of dismantling old machine 20,000 Cash proceeds from sale
account for machinery that it has assembled for owelo
Machinery
Cost of dismantling old machine 20,000 Cash proceeds from sal
Raw materials used
Labor in construction
Cost of installation
Materials spoiled in trial run
Profit on construction
Purchase of machine tools
of old machine
600,000
400,000 Depreciation for 2020
60,000
30,000
100,000
90,000
14,000
the new one had been fully depreciated.
2 The discount received on the payment of materials used in
construction totaled P40,000 and this was reported in the
purchase discount account.
3. The factory overhead account shows a balance of P2,500.000
for the year ended December 31, 2020. This balance exceeds
normal overhead on plant activities by P150,000 and
attributable to machine construction.
4. A profit was recognized on construction for the differens
between cost incurred and the price at which the machine
could have been purchased.
5. Machine tools have a useful life of 3 years.
6. Machinery has a useful life of 10 years and was used for
production beginning September 1. 2020.
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