On September 30, 2016, JP Company acquired a smelting machine for P270,000 paying a down payment of P90,000 and the balance to be paid in two equal annual installments on September 30, 2017 and September 30, 2018. There was no stated interest provided in the note, however, an 8% interest rate is considered to be appropriate for a note of this type. The PVF for an ordinary annuity of P1 @ 8% for 2 periods is 1.78. Additional costs for freight P5,000; installation and testing for P10,000. JP Company uses the straight-line method of depreciation. The smelting machine’s expected useful life is 5 years with a salvage value of P20,000. On January 1, 2019, it was determined that the smelting machine would be useful for at least 2 more years from this date. The expected salvage value was reduced to P10,000. The amount of depreciation expense to be included in JP Company’s 2019 income statement is
On September 30, 2016, JP Company acquired a smelting machine for P270,000 paying a down payment of P90,000 and the balance to be paid in two equal annual installments on September 30, 2017 and September 30, 2018. There was no stated interest provided in the note, however, an 8% interest rate is considered to be appropriate for a note of this type. The PVF for an ordinary annuity of P1 @ 8% for 2 periods is 1.78. Additional costs for freight P5,000; installation and testing for P10,000. JP Company uses the straight-line method of depreciation. The smelting machine’s expected useful life is 5 years with a salvage value of P20,000. On January 1, 2019, it was determined that the smelting machine would be useful for at least 2 more years from this date. The expected salvage value was reduced to P10,000. The amount of depreciation expense to be included in JP Company’s 2019 income statement is
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On September 30, 2016, JP Company acquired a smelting machine for P270,000 paying a down payment of P90,000 and the balance to be paid in two equal annual installments on September 30, 2017 and September 30, 2018. There was no stated interest provided in the note, however, an 8% interest rate is considered to be appropriate for a note of this type. The PVF for an ordinary annuity of P1 @ 8% for 2 periods is 1.78. Additional costs for freight P5,000; installation and testing for P10,000. JP Company uses the straight-line method of depreciation . The smelting machine’s expected useful life is 5 years with a salvage value of P20,000. On January 1, 2019, it was determined that the smelting machine would be useful for at least 2 more years from this date. The expected salvage value was reduced to P10,000. The amount of depreciation expense to be included in JP Company’s 2019 income statement is
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