ACTIVITY 3

EXERCISE 1

P 231,000−11,000
Annual depreciation - =P 19,167
12

Year Description Depreciation Acc. Depreciation Carrying amount

Original cost P241,000
1st P19,167 P19,167 P215,833 221,833
2nd 19,167 38,334 196,666 202,666
3rd 19,167 57,501 177,499 183,499
4th 19,167 76,668 158,332 164,332
5th 19,167 95,835 139,165 145,165
6th 19,167 115,002 119,998 125,998
7th 19,167 134,169 100,831 106,831
8th 19,167 153,336 81,664 87,664
9th 19,167 172,503 62,497 68,497
10th 19,167 191,670 43,330 49,330
11th 19,167 210,837 24,163 30,163
12th 19,167 230,004 4,996 10,996
P230,000

EXERCISE 2
Original cost = P1,424,000
Salvage value = 62,000
Useful life = 25 years

P 1,422,000−62,000
Depreciation rate = =P54,480
25
EXERCISE 3

5+1
SYD = 5x = 15
2

Year Description Depreciation Acc. Depreciation Carrying amount

Original cost P45,100
1st P41,300 x 5/15 P13,767 P13,767 31,333
2nd 41,300 x 4/15 11,013 24,780 20,320
3rd 41,300 x 3/15 8,260 33,040 12,060
4th 41,300 x 2/15 5,507 38,547 6,553
5th 41,300 x 1/15 2,753 41,300 3,800

EXERCISE 4

1
Declining rate = x 200 %=25 %
8

Year Description Depreciation Acc. Depreciation Carrying Amount

Original cost P1,500,000
1st P1,500,000 x 25% P375,000 P375,000 1,125,000
2nd 1,125,000 x 25% 287,250 656,250 843,750
3rd 843,750 x 25% 210,938 867,188 632,813
4th 632,813 x 25% 158,203 1,025,391 474,609
5th 474,609 x 25% 118,652 1,144,043 355,957
6th 355,957 x 25% 88,989 1,233,032 266,968
7th 266,968 x 25% 66,742 1,299,774 200,226
8th 200,226 – 130,000 70,226 1,400,000 130,000
P1,400,000

EXERCISE 5

Original Cost−salvage value P 850,000−P 80,000

Estimated useful life = = =4.8 yrs
Depreciationexpense 159,375
EXERCISE 6

P 7,350,000
Depreciation rate = =P 66.25 per hr .
120,000
Year Description Depreciation Acc. Depreciation Carrying amount
Original cost P7,350,000
1st 8,600 x P66.25 P569,750 P569,750 6,780,250
2nd 15,200 x 66.25 P1,007,000 1,576,750 P5,773,250

EXERCISE 7

P 190,000−P18,000
Depreciation rate = = P6.00 per unit
30,820
Year Description Depreciation Acc. Depreciation Carrying amount
Original cost P190,000
1st 16,080 x P6.00 P96,480 P96,480 93,520
2nd 9,210 x P6.00 55,260 151,740 38,260
3rd 5,530 x P6.00 33,180 184,920 P5,080

EXERCISE 8

P 792,000
Annual Depreciation = =P 88,000
9
Remaining life = 8-4 = 4

Original cost P792,000

Less: Depreciation in 2017 88,000
Less: Depreciation in 2018 88,000
Less: Depreciation in 2019 88,000
Less: Depreciation in 2020 88,000
Carrying amount as of 2021 P440,000
 P 440,000−84,000
New depreciation = =P 89,000
4

EXERCISE 9

P 35 0,000−5 4,000
Annual depreciation = =P 198,000
2

EXERCISE 10

COST REPLACEMENT COST

Machine P9,000,000 P11,200,000
Accumulated Depreciation 3,375,000
Age of the asset 8

Annual depreciation:
P 3,375,000
P 421,875=
8
Original life of the machine:

P 9,000 , 000
21 yrs=
P 421,875

COST REPLACEMENT COST APPRECIATION

Machine P9,000,000 P11,200,000 P2,200,000
Less: Accumulated Dep’n 3,375,000 4,266,667 891,667
BV/SV/RS P5,625,000 P6,933,333 P1,308,333

Machine P2,200,000
Accumulated Depreciation P891,667
Revaluation Surplus 1,818,182
To record revaluation surplus.
 EXERCISE 11
COST REPLACEMENT COST
Building P7,500,000 P6,5225,000
Accumulated Depreciation 975,000
Age of the asset 12
Fair value (2023) 4,885,000

Annual depreciation:

P 9 75,000
P 81,250=
12

Original life of the building:

P 7,5 00,000−4,885,000
32 yrs=
P 81,250

COST REPLACEMENT COST APPRECIATION

Building P7,500,000 P6,525,000 P975,000
Less: Accumulated Dep’n 975,000 615,000 360,000
BV/SV/RS P6,525,000 P5,910,000 P615,000

EXERCISE 12
Requirement 1
Annual depreciation for 2020:
P 15,567,000−567,000
Annual depreciation = =P600,000
25
Requirement 2
Cost P15,567,000
Less: Accumulated Depreciation 600,000
Carrying amount P14,967,000
Less: Recoverable annual date of impairment 10,125,000
Impairment loss P4,842,000
Requirement 3
Cost P15,567,000
Less: Depreciation
2020 600,000
2021 600,000
2022 600,000
Carrying value – 12/31/22 P13,767,000

Recoverable amount P13,767,000

Less: Residual value 567,000
Depreciable amount 13,300,000
Less: Remaining useful life / 22
Depreciation for 2023 P600,000

EXERCISE 13

Cash P5,880,000
A/R 8,223,000
Allowance for doubtful accounts (2,023,000)
Inventory 7,667,000
PPE 35,000,000
Accumulated depreciation 10,500,000
Goodwill 5,000,000
A/P 3,500,000
L/P 2,500,000
P64,247,000
Requirement 1
Total carrying amount before impairment P64,247,000
Less: Value in use 35,500,000
Impairment on loss P28,747,000
Less: Impairment has located to goodwill 5,000,000
Impairment loss allocated to other assets P23,747,000

Requirement 3
Carrying amount Ratio Allocated
before impairment Impairment use
PPE P35,000,000 .90 P31,500,000
Goodwill 5,000,000 .10 500,000
P40,000,000 P32,000,000