Problem 27-28 (AICPA Adapted) At the beginning of. the current year, Weird Company reported the following property, plant, and equipment and accumulated depreciation: Accumulated Cost depreciation Land Building Machinery 550,000 6;000,000 1,380,000 1,327,800 367,500 Building Double declining balance, 20 years, residual value is 10% of cost Straight line, 10 years Machinery On January 1, the entity completed the self-construction of a building. Direct costs of construction were P2,220,000. Construction of the building required 15,000 direct labor hours. The construction department has an overhead allocation system for outside jobs based on an activity denominator of 100,000 direct labor hours, budgeted fixed cost of P2,500,000, and budgeted variable cost of P27 per direct labor hour. * On July 1, machinery was purchased at a total invoice cost of P356,000. Additional costs of P23,000 to rectify damage on delivery and P18,000 for concrete embedding of ( machinery were incurred. A wall had to be demolished to enable a large machine to be moved into the plant. The wall demolition cost was P7,000, and rebuilding of the wall amounted to P19,000. Required: 1. Determine the depreciation of building for the current year. 2. Determine depreciation of machinery for the current year. 801
Problem 27-28 (AICPA Adapted) At the beginning of. the current year, Weird Company reported the following property, plant, and equipment and accumulated depreciation: Accumulated Cost depreciation Land Building Machinery 550,000 6;000,000 1,380,000 1,327,800 367,500 Building Double declining balance, 20 years, residual value is 10% of cost Straight line, 10 years Machinery On January 1, the entity completed the self-construction of a building. Direct costs of construction were P2,220,000. Construction of the building required 15,000 direct labor hours. The construction department has an overhead allocation system for outside jobs based on an activity denominator of 100,000 direct labor hours, budgeted fixed cost of P2,500,000, and budgeted variable cost of P27 per direct labor hour. * On July 1, machinery was purchased at a total invoice cost of P356,000. Additional costs of P23,000 to rectify damage on delivery and P18,000 for concrete embedding of ( machinery were incurred. A wall had to be demolished to enable a large machine to be moved into the plant. The wall demolition cost was P7,000, and rebuilding of the wall amounted to P19,000. Required: 1. Determine the depreciation of building for the current year. 2. Determine depreciation of machinery for the current year. 801
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Problem 27-28 (AICPA Adapted)
At the beginning of.the current year, Weird Company
reported the following property, plant, and equipment and
accumulated depreciation:
Accumulated
depreciation
Cost
Land
Building
Machinery
550,000
6;000,000
1,380,000
1,327,800
367,500
Building
Double declining balance, 20 years, residual value
is 10% of cost
Straight line, 10 years
Machinery
*
On January 1, the entity completed the self-construction
of a building.
Direct costs of construction were P2,220,000. Construction
of the building required 15,000 direct labor hours.
The construction department has an overhead allocation
system for outside jobs based on an activity denominator of
100,000 direct labor hours, budgeted fixed cost of
P2,500,000, and budgeted variable cost of P27 per direct
labor hour.
On July 1, machinery was purchased at a total invoice cost
of P356,000. Additional costs of P23,000 to rectify damage
on delivery and P18,000 for concrete embedding of (
machinery were incurred.
A wall had to be demolished to enable a large machine to be
moved into the plant.
The wall demolition cost was P7,000, and rebuilding of the
wall amounted to P19,000.
Required:
1. Determine the depreciation of building for the current
year.
2. Determine depreciation of machinery for the current
year.
801
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