Silver Company purchased a jewel polishing machine for P360,000 on January 1, 2021 and received a government grant of P50,000 towards the capital cost. Company policy is to treat the grant as a reduction in the cost of the asset. The machine was to be depreciated on a straight-line basis over 8 years and was estimated to have a residual value of P5,000 at the end of this period. Under PAS 20, what should be the depreciation expense in respect of the machine for the year ended December 31 2021? a. 38,750 b. 76,250 c. 44,375 d. 38,125

Silver Company purchased a jewel polishing machine for P360,000 on January 1, 2021 and received a government grant of P50,000 towards the capital cost. Company policy is to treat the grant as a reduction in the cost of the asset. The machine was to be depreciated on a straight-line basis over 8 years and was estimated to have a residual value of P5,000 at the end of this period. Under PAS 20, what should be the depreciation expense in respect of the machine for the year ended December 31 2021? a. 38,750 b. 76,250 c. 44,375 d. 38,125

Name: Silver Company purchased a jewel polishing machine for P360,000 on Jan
Uploaded: 2024-03-05T11:50:36.000Z
Channel: Bartleby
Description: Silver Company purchased a jewel polishing machine for P360,000 on January 1, 2021 and received a government grant of P50,000 towards the capital cost. Company policy is to treat the grant as a reduction in the cost of the asset. The machine was to

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter13: Property Transactions: Determination Of Gain Or Loss, Basis Considerations, And Nonta Xable Exchanges

Section: Chapter Questions

Problem 85P

See similar textbooks

Related questions

Q: e Fairy Company purchased a site for limestone quarry for P 100,000 on January 2,2020. It estimates…

A: a) The depletion cost per ton. Cost of quarry = P100,000 Asset retirement obligation value =…

Q: At the beginning of current year, Apple Company purchased a plating machine for P5,400,000. The…

A: Journal entries are the entries to be recorded in the accounting books of the business for all the…

Q: conditions. What is the depreciation for 2019? What is the depreciation for 2021? What is the…

A: The question is related to Government Garant. Required What is the depreciation for 2019? What is…

Q: Natalie Company purchased a machine for P6,600,000 on January 1, 2021 and received a government…

A: Here in this case, we are require to calculate depreciation expense for both the years. When any…

Q: Natalie Company purchased a machine for P 6, 600, 000 on January 1, 2014 and received a government…

A: Formula: Straight line depreciation = ( Cost of Asset - Salvage value ) / Useful life years.

Q: On January 2020, Mina Company paid the national government a fee in the amount of P129,000,000 for…

A: Government Fees P12,90,00,000 Present value of restoration cost (P10000000 * 0.385) P38,50,000…

Q: The Company also incurred P2,150,000 of development costs in preparing the property for the…

A: Carrying value is an important part of accounting it is measure of value in which the value of an…

Q: Natalie Company purchased a machine for P6,600,000 on January 1, 2022 and received a government…

A: As per IAS 20, Of IFRS Accounting for Government Grants If grant received for an asset is accounted…

Q: On January 1, 2019, Yolanda Company purchased a plating machine for P5,400,000. Yolanda received a…

A: The question is related to Government Grant. The details are under Cost of Planting machine as on…

Q: A company purchases two pieces of research equipment at the beginning of 2024. The first piece of…

A: Research and development expense need to be recognized in the year fully when it is generates…

Q: Qasio Private Limited (Pvt) developed a new intangible product. In developing this intangible asset,…

A: Date Particulars Dr (R) Cr (R) 2020 Jul-20 Intangible Assets 50000 Cash 50000…

Q: Keshia Company purchased a machine for P3,000,000 on January 1, 2022. The entity received a…

A: the recognition of government Grant is done only when there is a reasonable assurance that entity…

Q: Depletion Feller Company purchased a site for a limestone quarry for $100,000 on January 2, 2019. It…

A: Ending inventory in tons = 80,000 - 60,000 Ending inventory in tons = 20,000 tons

Q: On January 2

A: As per the provision given in IND AS 16, cost of property plant and equipment includes the…

Q: Quer Company purchased two machines for P250,000 each on January 2, 2020. The machines were put into…

A: Expense:- Expense is the use of an asset or service to generate revenue. Expense is the reduction in…

Q: On January 2020, Mina Company paid the national government a fee in the amount of P129,000,000 for…

A: Government Fees P12,90,00,000 Present value of restoration cost (P10000000 * 0.385) P38,50,000…

Q: On January 2020, Mina Company paid the national government a fee in the amount of P129,000,000 for…

A: Government Fees P12,90,00,000 Present value of restoration cost (P10000000 * 0.385) P38,50,000…

Q: At the beginning of current year, Darwin Company purchased a plating machine for 5,400,000. The…

A: Depreciation means decline in the estimation of benefit inside its valuable life because of mileage…

Q: On January 1, 2019, Yolanda Company purchased a plating machine for P5,400,000. Yolanda received a…

A: The carrying value of an asset is recorded in the balance sheet after depreciation and impairment…

Q: Qasio Private Limited (Pvt) developed a new intangible product. In developing this intangible asset,…

A: Date Particulars Dr ® Cr ® 2020 July, 2020 Intangible Assets 50000 Cash 50000…

Q: During 2020, Peach Company purchased a machine for P7,000,000 and received a government grant of…

A: The Company purchased a machine for P7,000,000 and received a government grant of 1,000,000 toward…

Q: ABC Company purchased a building on January 1, 2018 for P10, 000,000. The building has been…

A: Depreciation is the amount which charged on an equipment for knowing the remaining amount of that…

Q: houses and other fixed installations are constructed at a cost of P8,000,000 and such expenditures…

A: Every natural resource will lose out its value over the period of time. Depletion is being charged…

Q: On January 1,2020 Petron Company purchased an oil tanker depot at the cost of P 7,000,000 the entity…

A: Journal in accounting and book keeping is a book of records. It is used to record every monetary…

Q: On January 2021, AAA Company paid the national government a fee in the amount of P129,000,000 for an…

A: Depletion method is applied for assets such as mines, oil industries where exploration of natural…

Q: OH Corporation in 2017 paid ₱24,096,560 for a property with natural resources estimated at 1,025,600…

A: The depletion expense is charged on natural resources as reduction in value with the passage of…

Q: DEF Company purchased a building on January 1, 2018 for P10, 000,000. The building has been…

A: An asset will be considered to be impaired i.e., reduced in value when the carrying amount of the…

Q: Peach Company purchased a machine for P7, 000, 000 on Jan. 1, 2019 and received a government grant…

A: The process of recording business transactions in the books of accounts for the first time is known…

Q: . During 2020, Peach Company purchased machine for P7,0000,000 and received a government grant of…

A: SOLUTION- Government Grant refers to transfer of resources from government departments to an entity…

Concept explainers

Depreciation Methods

The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.

Topic Video

Question

a. 38,750

b. 76,250

c. 44,375

d. 38,125

Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Natalie Company purchased a machine for P6,600,000 on January 1, 2022 and received a government grant of P600,000 towards the capital cost. The policy is to treat the grant as a reduction in the cost of the asset. The machine is to be depreciated on a straight line basis over ten years with a residual value of P500,000. On January 1, 2024, the grant became fully repayable because of noncompliance with conditions. 1. What is the depreciation for 2022? A. 610,000 B. 600,000 C. 660,000 D. 550,000 2. What is the depreciation for 2024? A. 610,000 B. 600,000 C. 780,000 D. 730,000
Natalie Company purchased a machine for P6,600,000 on January 1, 2021 and received a government grant of P600,000 towards the capital cost. The policy is to treat the grant as reduction in the cost of asset. The machine is to be depreciated on a straight light basis over 10 years with a residual value of P500,000. On January 1, 2023, the grant became fully repayable because of noncompliance with conditions. What is the depreciation for 2021? What is the depreciation for 2023?
Natalie Company purchased a machine for P 6, 600, 000 on January 1, 2014 and received a government grant ofP600, 000 towards the capital cost. The policy is to treat the grant as a reduction in the cost of the asset. Themachine is to be depreciated on a straight line basis over 10 years with a residual value of P500, 000. On January 1,2016, the grant became fully repayable because of noncompliance with conditions. What is the depreciation for 2014?a. 610, 000 b. 600, 000 c. 660, 000 d. 550, 000 What is the depreciation for 2016?a. 610, 000 b. 600, 000 c. 780, 000 d. 730, 000
1. Patriotic Company purchased a machine for P6,000,000 on January 1, 2019, and received a government grant of P600,000 toward the asset cost. The accounting policy is to treat the grant as a reduction in the cost of the asset. The machine is to be depreciated on a straight-line basis over 10 years with a residual value of P500,000. On January 1, 2021, the grant becomes fully repayable because of noncompliance with conditions. What is the depreciation for 2019? What is the depreciation for 2021? What is the carrying amount of the machinery at the end of 2021? What is the depreciation for 2022?
On january 1, 2022, Sarah Company purchased a machine for 8,500,000 and received a government grant of 1,000,000 toward the asset cost. The accounting policy is to treat the grant as a reduction in the cost of the asset. The machine is to be depreciated on a straight line basis over 5 years with a residual value of 500,000. On january 1, 2024, the grant became fully repayable because of noncompliance with conditions. 1. What amount should be reported as depreciation for 2022? a. 1,700,000 b. 1,600,000 c. 1,500,000 d. 1,400,000 2. What amount should be reported as depreciation for 2024? a. 1,400,000 b. 1,800,000 c. 1,600,000 d. 2,000,000
At the beginning of current year, Apple Company purchased a plating machine for P5,400,000. The entity received a government grant of P400,000 toward this capital cost. The machine is to be depreciated on a 20% reducing balance basis over 10 years. The estimated residual value is P200,000. Required: Prepare journal entries for the current year, assuming the grant is accounted for as: a. Deferred income b. Deduction from asset
During 2020, Peach Company purchased a machine for P7,000,000 and received a government grant of 1,000,000 toward the capital cost. The machine is to be depreciated on a straight-line method basis over 5 years and estimated to have a residual value of P500,000 at the end of this period. Required: Prepare journal entries using Deferred Income Approach and Deduction from Asset Approach.
Quer Company purchased two machines for P250,000 each on January 2, 2020. The machines were put into use immediately. Machine A has a useful life of five years and can only be used on one research project. Machine B will be used for two years on a research and development project and then used by the production division for an additional eight years. Quer uses straight-line method of depreciation. What amount should Quer include in 2020 research and development expense?
OH Corporation in 2017 paid ₱24,096,560 for a property with natural resources estimated at 1,025,600 tons. The property was estimated to be worth ₱2,200,000 after removal of natural resources. Development costs of ₱11,025,200 were incurred in 2018 before withdrawals or extractions could be made. In 2019, resources removed totaled 150,000 tons. In 2020, additional development costs of ₱8,400,000 were incurred and resources are estimated to be 1,500,000 tons at the beginning of 2020. Resources extracted in 2020 totaled 175,000 tons. 1. What is the depletion expense for the year 2020?2. What is the carrying value of the wasting asset as of December 31, 2020?
Keshia Company purchased a machine for P3,000,000 on January 1, 2022. The entity received a government grant of P500,000 in respect to this asset. The policy is to depreciate the asset over five years on a straight line basis and to treat the grant as deferred income. On January 1, 2024, the grant became fully repayable because of noncompliance with conditions. What is the loss on repayment of grant in 2024? A. 500,000 В. 300,000 С. 200,000 D. 100,000
On January 1, 2022, Layag Company paid P11,000,000 for property containing natural resource of 2,000,000 tons of ore. The present value of the estimated cost of restoring the land after the resource is extracted is P900,000. The land will have a value of P1,500,000 after it is restored for suitable use. Tunnel, bunk houses and other fixed installations are constructed at a cost of P8,000,000 and such expenditures are charged to mine improvements. Operations began on January 1, 2022 and resources removed totaled 600,000 tons. During 2023, a discovery was made indicating that available resource after 2023 will totaled 1,875,000 tons. At the beginning of 2023, additional bunk houses were constructed in the amount of P770,000. In 2023, only 400,000 tons were mined because of a strike. 27) What amount should be recorded as depletion for 2023? A. 3,120,000 B. 2,850,000 C. 1,280,000 D.2,080,000 28) What amount should be recorded as depreciation for 2023?A. 1,120,000 B. 2,400,000 C.…
A. During 2020, Peach Company purchased machine for P7,0000,000 and received a government grant of P1,000,000 toward capital cost. The machine is to be depreciated on a straight-line method basis over 5 years and estimated to have residual value of P500,000 at the end of the period. Required: Prepare journal entries using Deferred Approach and Deduction from Asset Approach.