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Problem 4 (30 Marks) : Transactions During 2022 and Other Information Are As Follows
Problem 4 (30 Marks) : Transactions During 2022 and Other Information Are As Follows
Problem 4 (30 Marks) : Transactions During 2022 and Other Information Are As Follows
The following data pertain to Earth Corporation’s property, plant and equipment for 2022.
a) On January 2, 2022, Earth purchased a new truck for P1,000,000 cash and trade-in of a 2-year-old truck with a
cost of P900,000 and a book value of P270,000. The new truck has a cash price of P1,200,000; the market value
of the trade-in is not known.
b) On April 1, 2022, a machine purchased for P575,000 on April 1, 2027, was stolen. Earth recovered P387,500
from its insurance company.
c) On May 1, 2022, costs of P8,400,000 were incurred to improved leased office premises. The leasehold
improvements have a useful life of 8 years. The related lease terminates on December 31, 2028.
d) On July 1, 2022, machinery and equipment were purchased at a total invoice cost of P7,000,000; additional
costs of P125,000 for freight and P625,000 for installation were incurred.