1.

On January 1, 20X1 ABC Company bought machinery under a contract that required a down
payment of 100, 000, plus 24 monthly payments of 50, 000 each, for total cash payments of 1, 300,
000. The cash equivalent price of the machinery was 1, 100, 000. The machinery has an estimated
useful life of 10 years and estimated residual value of 50, 000. ABC uses straight line depreciation.
In its 20X1 income statement, what amount should ABC report as depreciation for this machinery?

2. ABC company acquired a drilling machine on October 1, 20X8 at a cost of P2, 500, 000 and
depreciated it at 25% per annum on a straight line basis. On October 1, 2020, the entity spent p500,
000 on upgrade to the machine in order to improve its efficiency and increase the inflow of economic
benefits over the machine’s remaining life. What depreciation expense should be recognized for the
year ended September 30, 2021?

3. At the start of its business, ABC Corp. decided to use the composite method of depreciation and
prepared the following schedule of machinery owned. Machine A - P275,000 cost; P25,000 salvage
value; 20 years estimated life Machine B - 100,000 cost; 10,000 salvage value; 15 years estimated
life Machine C - 20,000 cost; no salvage; 5 years estimated life ABC computes depreciation on the
straight-line method. Based on the information presented, the composite life of these assets (in years)
should be 16

4. Overberg Company purchased a machine on January 2, 20X0, for P1,000,000. The machine has an
estimated useful life of five years and a salvage value of P100,000. Depreciation was computed by
the 150% declining-balance method. The accumulated depreciation balance at December 31, 20X1,
should be

5. ABC Co. takes a full year's depreciation expense in the year of an asset's acquisition and no
depreciation expense in the year of disposition. Data relating to one of ABC' depreciable assets at
December 31, 20X5 are as follows: Acquisition year – 20X3; Cost - P350,000; Residual value -
50,000; Accumulated depreciation - 240,000; Estimated useful life - 5 years; Using the same
depreciation method as used in 20X3, 20X4, and 20X5, how much depreciation expense should ABC
record in 20X6 for this asset?

6. ABC purchased a machine on January 1, 20X0, for P18,000 cash. The machine has an estimated
useful life of four years and a salvage value of P4,700. ABC uses the double-declining-balance
method of depreciation for all its assets. What will be the machine's book value as of December 31,
20X1?

7. ABC Company uses hand tools in its manufacturing activities. On January 1, 20X0, there are 800 of
such tools on hand at a cost of P200 each. Acquisition and retirement in the year 20X0 are:
Acquisition - 400 @ P300 Retirement - 300 @ P50 Estimated value at year end - P200,000
Retirement may be assumed to be on a first-in, first-out basis. Compute the depreciation 20X0 under
inventory method

8. BC Company uses hand tools in its manufacturing activities. On January 1, 20X0, there are 800 of
such tools on hand at a cost of P200 each. Acquisition and retirement in the year 20X0 are:
Acquisition - 400 @ P300 Retirement - 300 @ P50 Estimated value at year end - P200,000
 Retirement may be assumed to be on a first-in, first-out basis. Compute the depreciation 20X0 under
Replacement method
9. ABC Company owns a machine that was bought on January 2, 20X8, for P376,000. The machine
was estimated to have a useful life of five years and a salvage value of P24,000. ABC uses the sum-
of-the-years'-digits method of depreciation. At the beginning of 2021, ABC determined that the
useful life of the machine should have been four years and the salvage value P35,200. For the year
2021, ABC should record depreciation expense on this machine of

10. ABC Corporation, which has a calendar year accounting period, purchased a new machine for
P80,000 on April 1, 20X0. At that time ABC expected to use the machine for nine years and then sell
it for P8,000. The machine was sold for P44,000 on Sept. 30, 20X5. Assuming straight-line
depreciation, no depreciation in the year of acquisition, and a full year of depreciation in the year of
retirement, the gain to be recognized at the time of sale would be

11. The ABC Company purchased a tooling machine in 20X1 for P120,000. The machine was being
depreciated on the straight-line method over an estimated useful life of 20 years, with no salvage
value. At the beginning of 2021, when the machine had been in use for ten years, the company paid
P20,000 to overhaul the machine. As a result of this improvement, the company estimated that the
useful life of the machine would be extended an additional five years. What would be the
depreciation expense recorded for the above machine in 2021? Round off final answer to the nearest
peso.

12. ABC Company uses hand tools in its manufacturing activities. On January 1, 20X0, there are 800 of
such tools on hand at a cost of P200 each. Acquisition and retirement in the year 20X0 are:
Acquisition - 400 @ P300 Retirement - 300 @ P50 Estimated value at year end - P200,000
Retirement may be assumed to be on a first-in, first-out basis. Compute the depreciation 20X0 under
retirement method

13. ABC Company’s depreciation policy on machinery is as follows: 1. A full year’s depreciation is
taken in the year of an asset’s acquisition. 2. No depreciation is taken in the year of an asset’s
disposition. 3. The estimated useful life is five years. 4. The straight-line method is used. On June 30,
2021, ABC sold for 2, 300, 000 a machine acquired in 20X8 for 4, 200, 000. The estimated residual
value was 600, 000. How much gain on the disposal should ABC record in 2021?

14. XYZ Corporation bought a machine on January 1, 20X1. In purchasing the machine, the company
paid P50,000 cash and signed an interest-bearing note for P100,000. The estimated useful life of the
machine is five years, after which time the salvage value is expected to be P15,000. Given this
information, how much depreciation expense would be recorded for the year ending December 31,
20X2, if the company uses the sum-of-the-years'-digits depreciation method?

15. ABC Construction purchased a crane on January 1, 20X0, for P102,750. At the time of purchase, the
crane was estimated to have a life of six years and a residual value of P6,750. In 20X2, ABC
determined that the crane had a total useful life of seven years and a residual value of P4,500. If ABC
uses the straight-line method of depreciation, what will be the depreciation expense for the crane in
20X2?
16. In January, ABC Corporation entered into a contract to acquire a new machine for its factory. The
machine, which had a cash price of P300,000, was paid for as follows: Down payment P 30,000;
Note payable in 10 equal monthly installments 240,000; 1,000 shares of ABC common stock with an
agreed value of P50 per share 50,000. Prior to the machine's use, installation costs of P8,000 were
incurred. The machine has an estimated useful life of ten years and an estimated salvage value of
P10,000. What should ABC record as depreciation expense for the first year under the straight-line
method?

17. ABC Company purchased a machine on December 1, 20X1 at an invoice price of 4, 500, 000 with
terms 2/10, n/30. On December 10, 20X0, ABC paid the required amount for the machine. On
December 1, 20X0, ABC paid 80, 000 for delivery of the machine and on December 31, 20X0, it
paid 310, 000 for installation and testing of the machine. The machine was ready for use on January
1, 20X1. It was estimated that the machine would have a useful life of 5 years and a residual value of
800, 000. Engineering estimates indicated that the useful life in productive units was 200, 000. Units
actually produced during the first 2 years were 30, 000 in 20X1 and 48, 000 in 20X2. ABC Company
decided to use the output method of depreciation. What is the depreciation of the machine for 20X2?

18. ABC Company acquired a factory building, an equipment, and machinery on January 1, 20X0. The
cost of each asset acquired and other relevant information are as follows: 1. Building - 4,200,000
cost; 200,000 residual value; 20 years useful life; Sum-of-the-years digit depreciation method. 2.
Equipment - 1,650,000 cost; 50,000 residual value; 8 years useful life; Double declining balance
depreciation method. 3. Machinery - 900,000 cost - 5 years useful life - Service hours method
depreciation method. The service hours of the machine each year from the year of acquisition are
5,000; 4,000; 3,000; 2,000; and 1,000, respectively. What is the accumulated depreciation balance at
the end of 20X1?

19. ABC Company acquired a factory building, an equipment, and machinery on January 1, 20X0. The
cost of each asset acquired and other relevant information are as follows:

Building - 4,200,000 cost; 200,000 residual value; 20 years useful life; Sum-of-the-years
digit depreciation method.
2. Equipment - 1,650,000 cost; 50,000 residual value; 8 years useful life; Double declining
balance depreciation method.
3. Machinery - 900,000 cost - 5 years useful life - Service hours method depreciation method.

The service hours of the machine each year from the year of acquisition are 5,000; 4,000;
3,000; 2,000; and 1,000, respectively. Compute the total depreciation on the year of
acquisition.