Transactions for 2021 were as follows:An new elevator system costing P800,000 was installed on the company’s Office Building and was completed in early January.On March 31, the company traded a new factory machinery with a cash price of P6M for one of its old Factory Machinery with an original cost of P4M. The trade-in value agreed upon on the old machinery was at P2.2M. The company paid the difference in cash.On September 1, a piece of office equipment was sold for P2M. The office equipment had an original cost of P3.2M. On October 31, a replacement office equipment was acquired on installment basis. A P500,000 down-payment was made plus a P3M note payable in three equal installments starting October 31, 2022. The interest rate appropriate for this transaction was ascertained at 10%. Installation and commissioning cost were incurred at P65,890. Estimated decommissioning cost upon retirement was also estimated at P101,302.What is the gain on sale of the office equipment on September 1? You were assigned to audit the Property, plant and equipment account of your continuingaudit client Lolita Corp. for the period ended December 31, 2021. The PPE file in thepermanent working paper and in the prior year working paper included the followingschedule:December 31, 2020 balancesDebitCreditLand5,600,000Office Building9,800,000Accumulated depreciation OB1,862,000Factory Building4,500,000Accumulated depreciation - FB978,750Office Equipment5,000,000Accumulated depreciation - OE1,250,000Factory Machineries9,000,000Accumulated depreciation FM2,798,182All assets were acquired at the inception of operations at the beginning of 2019 and arebeing depreciated through the following policies:Office Building - Double-declining balance over 20 years (10% salvage value based oncost)Factory Building - SYD over 15 years (10% salvage value based on cost)Office Equipment - Straight-line method over 8 years (no salvage value)Factory Machineries - SYD over 10 years (10% salvage value based on cost)

Gain on sale of office equipment is the excess amount received by way of sale over the carrying…

Answered: On September 1, a piece of office…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Transactions for 2021 were as follows:

An new elevator system costing P800,000 was installed on the company’s Office Building and was completed in early January.
On March 31, the company traded a new factory machinery with a cash price of P6M for one of its old Factory Machinery with an original cost of P4M. The trade-in value agreed upon on the old machinery was at P2.2M. The company paid the difference in cash.
On September 1, a piece of office equipment was sold for P2M. The office equipment had an original cost of P3.2M. On October 31, a replacement office equipment was acquired on installment basis. A P500,000 down-payment was made plus a P3M note payable in three equal installments starting October 31, 2022. The interest rate appropriate for this transaction was ascertained at 10%. Installation and commissioning cost were incurred at P65,890. Estimated decommissioning cost upon retirement was also estimated at P101,302.

What is the gain on sale of the office equipment on September 1?

You were assigned to audit the Property, plant and equipment account of your continuing
audit client Lolita Corp. for the period ended December 31, 2021. The PPE file in the
permanent working paper and in the prior year working paper included the following
schedule:
December 31, 2020 balances
Debit
Credit
Land
5,600,000
Office Building
9,800,000
Accumulated depreciation OB
1,862,000
Factory Building
4,500,000
Accumulated depreciation - FB
978,750
Office Equipment
5,000,000
Accumulated depreciation - OE
1,250,000
Factory Machineries
9,000,000
Accumulated depreciation FM
2,798,182
All assets were acquired at the inception of operations at the beginning of 2019 and are
being depreciated through the following policies:
Office Building - Double-declining balance over 20 years (10% salvage value based on
cost)
Factory Building - SYD over 15 years (10% salvage value based on cost)
Office Equipment - Straight-line method over 8 years (no salvage value)
Factory Machineries - SYD over 10 years (10% salvage value based on cost)

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