Write CAPITALIZED if the subsequent cost incurred SHALL FORM PART of the carrying amount of the PPE or EXPENSED OUTRIGHT if the subsequent cost incurred SHALL NOT FORM PART of the carrying amount of the PPE. Rearranged the production PPEs in Factory B for P 400,000 to accommodate a newly purchased equipment that will make the production process faster and more efficient. Repaired one of the machineries for P 350,000 as part of factory’s annual examination. Repaired another machinery for P 275,000 to prolong its remaining useful life from five years to seven years. Replaced a significant part of a production equipment for P 900,000. The equipment has an original cost of P 4,000,000 and accumulated depreciation as of date P 1,000,000. The part replaced represented 20% of the carrying amount and it was sold for a very nominal amount.
Write CAPITALIZED if the subsequent cost incurred SHALL FORM PART of the carrying amount of the PPE or EXPENSED OUTRIGHT if the subsequent cost incurred SHALL NOT FORM PART of the carrying amount of the PPE. Rearranged the production PPEs in Factory B for P 400,000 to accommodate a newly purchased equipment that will make the production process faster and more efficient. Repaired one of the machineries for P 350,000 as part of factory’s annual examination. Repaired another machinery for P 275,000 to prolong its remaining useful life from five years to seven years. Replaced a significant part of a production equipment for P 900,000. The equipment has an original cost of P 4,000,000 and accumulated depreciation as of date P 1,000,000. The part replaced represented 20% of the carrying amount and it was sold for a very nominal amount.
Chapter11: Long-term Assets
Section: Chapter Questions
Problem 5Q: For each of the following transactions, state whether the cost would be capitalized (C) or recorded...
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Write CAPITALIZED if the subsequent cost incurred SHALL FORM PART of the carrying amount of the PPE or EXPENSED OUTRIGHT if the subsequent cost incurred SHALL NOT FORM PART of the carrying amount of the PPE.
- Rearranged the production PPEs in Factory B for P 400,000 to accommodate a newly purchased equipment that will make the production process faster and more efficient.
- Repaired one of the machineries for P 350,000 as part of factory’s annual examination.
- Repaired another machinery for P 275,000 to prolong its remaining useful life from five years to seven years.
- Replaced a significant part of a production equipment for P 900,000. The equipment has an original cost of P 4,000,000 and
accumulated depreciation as of date P 1,000,000. The part replaced represented 20% of the carrying amount and it was sold for a very nominal amount.
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