LGR Corporation purchased three (3) pieces of equipment during 2020. A summary is presented below: Equipment AA1001 was purchased on January 3 for P4,000,000. The freight charges related to the delivery of the said piece of equipment total to P50,000. The cost incurred for installing the item was P10,000, and an additional cost of P15,000 for testing the equipment was also paid. Proceeds from the initial testing of the equipment was P2,300. The estimated selling price of Equipment AA1001 at the end of its 10-year useful life is P40,000, and the estimated cost to dismantle is P30,000 (prevailing rate is 8%; present value of dismantling cost is P13,900). The expected total units that can be produced by the said equipment during its life is 18,000 units, and the total number of units produced for 2020 is 2,800. The entity used SYD in depreciating Equipment AA1001. Equipment CZ4225 was purchased on April 30 for P1,800,000. The entity paid P300,000 as down payment; the remaining shall be paid in three (3) equal annual instalments starting on April 30, 2021. The entity issued a 9% interest-bearing note for the balance. The said equipment can be sold for P10,000 at the end of its 5-year useful life. The entity used straight-line method in depreciating Equipment CZ4225. • Equipment ZG2184 was purchased on account for P2,400,000 on December 30. The term is 2/15, n/30; however, due to tight cash, the entity was not able to pay the balance on time for the 2% discount. The estimated useful life of the equipment is 20 years. The said equipment has no residual value.
LGR Corporation purchased three (3) pieces of equipment during 2020. A summary is presented below: Equipment AA1001 was purchased on January 3 for P4,000,000. The freight charges related to the delivery of the said piece of equipment total to P50,000. The cost incurred for installing the item was P10,000, and an additional cost of P15,000 for testing the equipment was also paid. Proceeds from the initial testing of the equipment was P2,300. The estimated selling price of Equipment AA1001 at the end of its 10-year useful life is P40,000, and the estimated cost to dismantle is P30,000 (prevailing rate is 8%; present value of dismantling cost is P13,900). The expected total units that can be produced by the said equipment during its life is 18,000 units, and the total number of units produced for 2020 is 2,800. The entity used SYD in depreciating Equipment AA1001. Equipment CZ4225 was purchased on April 30 for P1,800,000. The entity paid P300,000 as down payment; the remaining shall be paid in three (3) equal annual instalments starting on April 30, 2021. The entity issued a 9% interest-bearing note for the balance. The said equipment can be sold for P10,000 at the end of its 5-year useful life. The entity used straight-line method in depreciating Equipment CZ4225. • Equipment ZG2184 was purchased on account for P2,400,000 on December 30. The term is 2/15, n/30; however, due to tight cash, the entity was not able to pay the balance on time for the 2% discount. The estimated useful life of the equipment is 20 years. The said equipment has no residual value.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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How much is the total cost of the three (3) pieces of equipment?
Transcribed Image Text:LGR Corporation purchased three (3) pieces of equipment during 2020. A
summary is presented below:
Equipment AA1001 was purchased on January 3 for P4,000,000. The
freight charges related to the delivery of the said piece of equipment
total to P50,000. The cost incurred for installing the item was
P10,000, and an additional cost of P15,000 for testing the equipment
was also paid. Proceeds from the initial testing of the equipment was
P2,300. The estimated selling price of Equipment AA1001 at the end
of its 10-year useful life is P40,000, and the estimated cost to
dismantle is P30,000 (prevailing rate is 8%; present value of
dismantling cost is P13,900). The expected total units that can be
produced by the said equipment during its life is 18,000 units, and the
total number of units produced for 2020 is 2,800. The entity used
SYD in depreciating Equipment AA1001.
Equipment CZ4225 was purchased on April 30 for P1,800,000. The
entity paid P300,000 as down payment; the remaining shall be paid in
three (3) equal annual instalments starting on April 30, 2021. The
entity issued a 9% interest-bearing note for the balance. The said
equipment can be sold for P10,000 at the end of its 5-year useful life.
The entity used straight-line method in depreciating Equipment
CZ4225.
• Equipment ZG2184 was purchased on account for P2,400,000 on
December 30. The term is 2/15, n/30; however, due to tight cash, the
entity was not able to pay the balance on time for the 2% discount.
The estimated useful life of the equipment is 20 years. The said
equipment has no residual value.
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