On January 1, 1978, the purchasing engineer of JJ Hernandez Cement Co. purchased a new machine at a cost of Php. 140,000.00. Depreciation has been computed by the straight-line method based on an estimated useful life of five years and residual scrap value of Php. 12,800.00. On January 2, 1981, extraordinary repairs ( which were almost equivalent to a rebuilding of the machinery) were performed at a cost of Php. 30,400.00. Because of the thorough going nature of these repairs, the normal life of the machinery was extended materially. The revised estimate of useful life was four years from January 1, 1981. Determine the annual provisions for depreciation for the years 1978 to 1980 and
On January 1, 1978, the purchasing engineer of JJ Hernandez Cement Co. purchased a new machine at a cost of Php. 140,000.00. Depreciation has been computed by the straight-line method based on an estimated useful life of five years and residual scrap value of Php. 12,800.00. On January 2, 1981, extraordinary repairs ( which were almost equivalent to a rebuilding of the machinery) were performed at a cost of Php. 30,400.00. Because of the thorough going nature of these repairs, the normal life of the machinery was extended materially. The revised estimate of useful life was four years from January 1, 1981. Determine the annual provisions for depreciation for the years 1978 to 1980 and
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 1978, the purchasing engineer of JJ Hernandez Cement Co.
purchased a new machine at a cost of Php. 140,000.00. Depreciation has been
computed by the straight-line method based on an estimated useful life of five
years and residual scrap value of Php. 12,800.00. On January 2, 1981,
extraordinary repairs ( which were almost equivalent to a rebuilding of the
machinery) were performed at a cost of Php. 30,400.00. Because of the thorough
going nature of these repairs, the normal life of the machinery was extended
materially. The revised estimate of useful life was four years from January 1, 1981.
Determine the annual provisions for depreciation for the years 1978 to 1980 and
the adjusted provision for depreciation on December 31, 1981. assume payment in
cash for the machine and extraordinary repairs.
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