The patent, which originally cost P 17,000, is being amortized to Administrative Expense over a 17-year life. Evidence clearly indicates that its economic life will approximate 14 years from date of acquisition. Service revenues earned but not yet collected were not recognized when earned as follows: 2019, P 5,000; and 2020, P 7,500. Revenue is recognized when collection is made. • A delivery truck purchased in January 2020, at a cost of P 13,000, was debited to Selling expenses at that time. The truck has an estimated useful life of 10 years and an estimated residual value of P 2,000. The company uses straight-line depreciation method. • Allowance for doubtful accounts in 2019 was understated by P 8,500.

The patent, which originally cost P 17,000, is being amortized to Administrative Expense over a 17-year life. Evidence clearly indicates that its economic life will approximate 14 years from date of acquisition. Service revenues earned but not yet collected were not recognized when earned as follows: 2019, P 5,000; and 2020, P 7,500. Revenue is recognized when collection is made. • A delivery truck purchased in January 2020, at a cost of P 13,000, was debited to Selling expenses at that time. The truck has an estimated useful life of 10 years and an estimated residual value of P 2,000. The company uses straight-line depreciation method. • Allowance for doubtful accounts in 2019 was understated by P 8,500.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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