Valix Finacc vol 1 Problem 17-31 to 34

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 17 Problem 17-31 to 34

Problem 17-31  Answer  B

Straight line rate (100% / 5 years)                                                                                      20%

Fixed rate (20% x 2)                                                                                                           40%

2006 depreciation (5,000,000 x 40%)                                                                         2,000,000

2007 depreciation (3,000,000 x 40%)                                                                         1,200,000

Accumulated depreciation, December 31, 2007                                                     3,200,000

Depreciation for 2008 – straight line (5,000,000 – 3,200,000 / 3)                                   600,000

Accumulated depreciation, December 31, 2008                                                     3,800,000

Problem 17-32  Answer  A

Cost – 1/1/2005                                                                                                        7,200,000

Accumulated depreciation – 12/31/2007 (7,200,000 / 10 x 3)                       2,160,000

Book value – 12/31/2007                                                                                          5,040,000

SYD for the remaining life of 7 years (1 + 2 + 3 + 4 + 5 + 6 + 7)                                           28

Depreciation for 2008 (5,040,000 x 7/28)                                                                   1,260,000                                                                        

Problem 17-33  Answer  B

Annual depreciation (1,536,000 / 8)                                                                            192,000

                                                                                                             235

Problem 17-34  Answer  B

                                                                                                                                   

Fixed rate (100% / 4 x 2)                                                                                                     50%

Cost                                                                                                                           6,000,000

Depreciation for 2007 (50% x 6,000,000)                                                                     3,000,000

Book value – 1/1/2008                                                                                   3,000,000

Residual value                                                                                              (  600,000)

Maximum depreciation in 2008                                                                                 2,400,000

Fixed rate in 2008 (100% / 2 x 2)                                                                                        100%

This means that the computers should be fully depreciated in 2008. Since there is a residual value of P600,000, the maximum depreciation for 2008 is equal to the book value of P3,000,000 minus the residual value of P600,000 or P2,400,000.

Valix Finacc vol 1 Problem 17-26 to 30

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 17 Problem 17-26 to 30

Problem 17-26  Answer  B

The first three fractions are:

            2006                             10/55

            2007                               9/55

            2008                               8/55

Thus, the 2008 depreciation of P240,000 is equal to 8/55.

Depreciable cost (240,000 / 8/55)                                                                             1,650,000

Salvage                                                                                                                         50,000

Total cost                                                                                                                  1,700,000

Problem 17-27  Answer  B

April 1, 2006 to March 31, 2007 (5/15 x 3,000,000)                                                      1,000,000

April 1, 2007 to March 31, 2008 (4/15 x 3,000,000)                                                         800,000

Accumulated depreciation, March 31, 2008                                                1,800,000

Problem 17-28  Answer  A

The accumulated depreciation on December 31, 2007 is recomputed following a certain method.  The same is arrived at following the SYD as follows:

                                    SYD  =  1 + 2 + 3 + 4 + 5  =  15

2005  (5/15 x 900,000)                                                                                                   300,000

2006  (4/15 x 900,000)                                                                                                   240,000

2007  (3/15 x 900,000)                                                                                                   180,000

Accumulated depreciation – 12/31/2007                                                                    720,000

Accordingly, the SYD is followed for 2008.

2008 depreciation (2/15 x 900,000)                                                                              120,000

Problem 17-29  Answer  B

Straight line rate (100% / 8 years)                                                                                   12.5%

Fixed rate (12.5 x 2)                                                                                                           25%

2007 depreciation (1,280,000 x 25%)                                                                            320,000

2008 depreciation (1,280,000 – 320,000 x 25%)                                                240,000

Problem 17-30                     

1.  4,000,000 – 2,560,000 x 40%                           (Answer  D)                                        576,000

2.  1,800,000 x 2/15 (SYD)                                  (Answer  A)                                          240,000

3.  Sales price                                                                                                            1,700,000

     Book value (2,800,000 – 1,344,000)                                                                       1,456,000

     Gain                                                           (Answer  A)                                          244,000

Valix Finacc vol 1 Problem 17-20 to 25

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 17 Problem 17-20 to 25

Problem 17-20  Answer  A                                                 

Cost of machinery (cash price)                                                                                1,100,000

Less: Residual value                                                                                                      50,000

Depreciable cost                                                                                                      1,050,000

Straight line depreciation (1,050,000 / 10)                                                                   105,000

Problem 17-21  Answer  B

Sales price                                                                                                                2,300,000

Book value:

      Cost                                                                                            4,200,000

      Accumulated depreciation (3,600,000 / 5 x 3)                           2,160,000         2,040,000

Gain                                                                                                                           260,000

Problem 17-22  Answer  B

Accumulated depreciation – 12/31/2007                                                                3,700,000

Add: Depreciation for 2008                                                                                        550,000

Total                                                                                                                        4,250,000

Less: Accumulated depreciation on property, plant and

             equipment retirements (squeeze)                                                                 250,000

Accumulated depreciation – 12/31/2008                                                                4,000,000

Problem 17-23  Answer  B

                                                                        Depreciable                                    Annual   

                           Cost             Salvage                  cost                   Life             depreciation

A                      550,000 50,000                    500,000                           20                       25,000

B                      200,000 20,000                    180,000                           15                       12,000  

C                       40,000                                 40,000                            5                        8,000

                        790,000                               720,000                                                     45,000

  

Composite life = 720,000 / 45,000                                                                           16 years

Problem 17-24  Answer  D

Invoice price                                                                                                           4,500,000

Cash discount (2% x 4,500,000)                                                                              (     90,000)

Delivery cost                                                                                                                 80,000

Installation and testing                                                                                               310,000

Total cost                                                                                                                  4,800,000

Salvage value                                                                                                 800,000

Depreciable cost                                                                                                      4,000,000

Rate per unit (4,000,000 / 200,000)                                                                                      20

Depreciation for 2008 (30,000 x 20)                                                                              600,000

           

Problem 17-25  Answer  B

Cost                                                                                                                          4,000,000

Accumulated depreciation

      2007  (8/36 x 3,600,000)                                                                  800,000

      2008  (7/36 x 3,600,000)                                                                  700,000         1,500,000

Book value, 12/31/2008                                                                                           2,500,000

Valix Finacc vol 1 Problem 17-19

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 17 Problem 17-19

1. Old building (4,672,200 x 10%)                                                                                  467,220    

    New building

               Direct cost                                                                         2,220,000

               Fixed (15,000 x 25)                                                                 375,000

               Variable (15,000 x 27)                                                            405,000

               Total cost                                                                           3,000,000

    3,000,000 x 10%                                                                                                        300,000

    Total depreciation                                                                                                   767,220

    Fixed rate (100 / 20 x 2)                                                                                                 10%

                                                                                                                                   

2. Old machinery (1,380,000 / 10)                                                                                138,000

    New machinery

            Invoice cost                                                                             356,000

            Concrete embedding                                                   18,000

            Wall demolition                                                                           7,000

            Rebuilding of wall                                                                     19,000

            Total cost                                                                                 400,000

    400,000 / 10 x 6/12                                                                                                     20,000

    Total depreciation                                                                                                   158,000

Valix Finacc vol 1 Problem 17-18

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 17 Problem 17-18

1. Beginning balance                                                                                                  875,000

    Acquisition (150,000 / 750,000 x 1,250,000)                                                               250,000

    Total cost of land                                                                                                 1,125,000

    Technically, the land for undetermined use is an investment property.

2. Old (7,500,000 – 1,644,500 x 8%)                                                                               468,440

    New (600,000/750,000 x 1,250,000 = 1,000,000 x 8%)                                                   80,000

    Depreciation – building                                                                                          548,440

3.  2,250,000 / 10                                                                                                          225,000

    400,000 / 10 x 6/12                                                                                                     20,000

    Depreciation – machinery                                                                          245,000

4. Depreciation – leasehold improvements (216,000 – 108,000 / 5 years)                      21,600

 

5. Depreciation – land improvements 192,000 / 12 x 9/12)                                           12,000

Valix Finacc vol 1 Problem 17-17

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 17 Problem 17-17

1. Land (350,000 + 450,000)                                                                                          800,000                                                                                                                                               

    Land acquired (380,000 + 25,000 + 45,000)                                                  450,000    

2. Depreciation of land improvements (180,000 / 15)                                                   12,000                

3. Depreciation of building (4,500,000 – 1,050,000 x 7.5%)                                            258,750                                                                                                                                                      

                                                                                                              231        

4. Depreciation of machinery and equipment

(1,160,000 – 60,000 / 10)                                                                                   110,000      

(300,000 / 10)                                                                                                     30,000            (60,000 / 10 x 6/12)                                                                                                   3,000         

                                                                                                                                    143,000

5. Fixed rate (100% / 3 x 1.5)                                                                                             50%         

 

    (1,800,000 – 1,344,000 x 50%)                                                                                    228,000