Module 5: Assignment

1. 1.

Historical Cost Replacement Cost Increase (Decrease)

Machinery Php 12,000,000 Php 14,000,000 Php 2,000,000
Accumulated Depreciation Php 2,400,000 Php 2,800,000 Php 400,000
Difference Php 9,600,000 Php 11,200,000 Php 1,600,000

2. Replacement Cost Php 11,200

No. of Years 25 years
Depreciation Expense – 2018 Php 448,000

3. Revaluation Surplus Php 1,600,000

No of Years 25 years
Piecemeal realization – 2018 Php 64,000
No of Unexpired Years 24 years
Balance – revaluation surplus Php 1,536,000

4. Carrying Amount Php 11,200,000

Accumulated Depreciation (2 years) 896,000
Book Value – Jan 1, 2020 Php 10,304,000

Selling Price Php 10,000,000

Less: Book Value 10,304,000
Loss on Sale Php 304,000

5. Revaluation Surplus Php 1,600,000

Piecemeal Realization (2 years) 128,000
Balance Php 1,472,000

2. 1. Warranty payable P 302,400

Add warranty expense accrued 756,000
Total 1,058,400
Less payments during 644,400
Warranty payable P 414,000

2. Bond discount (P6,000,000 x .04) P 240,000

Discount amortization (P240,000 X 5.5/ 10) 132,000
Bond discount, 3/31 / 10 P 108,000

3. Bond interest payable (P6,000,000 x 12% x 6/ 12) P 360,000

4. Notes payable - current P 2,880,000

Accrued interest payable - Notes payable 408,000
Estimated warranty payable ) 414,000
Accounts payable 672,000
Cash dividends payable (6 million shares x P0.30) 1,800,000
Accrued interest payable - Bonds payable 360,000
Total current liabilities P 6,534,000

5. Notes payable - noncurrent P 3,240,000

Bonds payable, net of discount of P108,000 5,892,000
 Total noncurrent liabilities 6,534,000

3. 1. Warranty expense (P43,200,000 x 2%) P864,000

2. Estimated liability from warranties P 1,088,000

Add: Warranty expense 864,000
Total 1,952,000
Less: actual expenditures 1,312,000
Estimated liability from warranties P 1,088,000

3. Premium expense [(14,400,000 x 60%) / 200 x P14] P604,800

4. Inventory of premium P 319,600

Add premium purchases (52,000 x P34) 1,768,000
Total premium available 2,087,600
Less premiums issued (9,600,000/200 x P34) 1,632,000
Inventory of premium P 455,600

5. Estimated premium claims outstanding P 358,400

Add premium expense 604,800
Total 963,200
Less premiums issued (9,600,000/200 x P14) 672 000
Estimated premium claims outstanding P 291,000

4. 1. Financial Income Php 2,500,000

Accrued Income 100,000
Taxable Income Php 2,400,000
Tax Rate 30%
Current Tax Expense Php 720,000

2. Financial Income Php 2,500,000

Tax Rate 30%
Income tax expense Php 750,000

3. Current tax expense Php 720,000

Less: Current tax payment 250,000
Income tax payable Php 470,000

5. 1.Financial Income Php 9,000,000

Permanent Difference (1,500,000)
Temporary Difference (warranty) 700,000
(depreciation) (500,000)
Total Php 7,700,000
Tax Rate 30%
Current Liability Php 2,310,000

2. Financial Income Php 9,000,000

Permanent Difference (1,500,000)
Total Php 7,500,000
Tax Rate 30%
Income tax expense Php 2,250,000
 3. Tax liability Php 2,310,000
Tax payment 500,000
Tax Payable Php 1,810,000

6. 1. Downpayment Php 130,000

PV of future payment (Php 130,000 x 2.4869) 323,297
Incidental Expenses 40,000
PV of BPO (Php 50,000 x .6830) 34,150
Cost of machinery Php 527,447

2.
Date Payment Interest Amortization Present Value
2018 Php 527.447 (2)
December 31, 2018 P170,000 Php 170,000 Php 357,447
December 31, 2019 Php 130,000 Php 35,745 (3) Php 94,255 Php 263,192 (4)

7. 1. Downpayment Php 130,000

PV of future payment (Php 130,000 x 2.4226) 314,938 (11.5%)
PV of BPO (Php 50,000 x .6470) 32,350
Incidental expenses 40,000
Cost of machinery Php 517,288

2.

Date Payment Interest Amortization Present Value

2018 Php 517.288
December 31, 2018 P170,000 Php 170,000 Php 347,288
December 31, 2019 Php 130,000 Php 39,938 Php 90,062 Php 2572262

8. Fair Value, January 1 Php 1,300,000

Contributions 1,400,000
Return on plan assets (12%) 156,000
Benefits paid (500,000)
Settlement price ( 80,000)
Fair value, December 31 Php 2,276,000

9. Present Value, January 1 Php 1,200,000

Current cost 400,000
Past service cost 600,000
Increase due to actuarial assumption 200,000
Interest (12%) 144,000
Benefits paid (500,000)
Present value of settled DBO (400,000)
Defined benefit obligation, Dec 31 Php 1,644,000
Thank You!