1. Spin Co, acquired a machine on January 1, 20x1 for P500,000.

Depreciation methods The machine was estimated

Requirements: Prepare the (1) depreciation table and (2) journal entries on Dec. 31, 20x1 and Dec. 31, 20x2
under each of the following depreciation methods:

a Straight line method

b. Sum-of-the-years' digits method
c. Double declining balance method
ds The machine was estimated to have a useful life of 4 years and a residual value equal to 10% of the cost.

0x1 and Dec. 31, 20x2

2. Use the information in the preceding problem, except that the machine was estimated to have a total service life
of 12,000 hours and a total productive capacity of 360,000 units of a product. Information on actual usage and prod
in the first two years is as follows:

Year Manufacturing hours Units produced

20x1 3600 120000
20x2 3000 100000

Requirement: Prepare the journal entries on Dec. 31, 20x1 and Dec 31, 20x2 using the units-of-production method
wherein the depreciation rate is determined

c. based on input; and

d. based on output
ated to have a total service life
ation on actual usage and production

e units-of-production method
3. Glass Finish Co. made some improvements on a leased property for a total cost of P450,000. The estimated
useful life of the improvements was 6 years. The remaining lease term is 5 years, extendible for another 5 years at t
Glass At the time the improvements were completed, Glass was not on a leased yet sure on whether to renew
the lease. How much is the annual depreciation on the leasehold improvements?
P450,000. The estimated
endible for another 5 years at the option of
ure on whether to renew
On January 1, 20x1, Compress Co. acquired a piece of factory equipment for P9,000,000. Compress Co. depreciated
the machine over a useful life of 15 years and a residual value of P600,000 using the straight line method. In 20x8, C
to change the depreciation method to sum-of-the years' digits method. Compress Co. revised the equipment's
useful life to 20 years, starting from acquisition date, and the residual value to P800,000. What is the journal entry
00. Compress Co. depreciated
traight line method. In 20x8, Compress Co. decided
revised the equipment's
00. What is the journal entry on Dec. 31, 20x8?
5. On Jan. 1, 20x1, Dawn Co. acquired a piece of factory equipment for P10,000,000. Dawn Co. depreciated
the equipment over a useful life of 10 years using the straight line method. A residual value of P800,000 was attribu
to the equipment as a whole. On Jan. 1, 20x7, a major part of the equipment was replaced for a total cost of
P3,000,000. The replaced part has no residual value.

Requirements: Provide the journal entries on Jan. 1, 20x7 under the following scenarios:

a. The cost of the replaced part is P2,500,000

b. The cost of the replaced part is indeterminable.
Dawn Co. depreciated
value of P800,000 was attributed
aced for a total cost of
6. Corona Co. determined the following information for the purpose of revaluing its building:

Historical Cost 30000000

Accumulated Depreciation 9000000
Fair Value 25200000
Remaining Useful life 8 years
Depreciation methid SLM
Residual value 1200000
Income tax rate 30%

Requirements: a Compute for the revaluation surplus, net of tax.

b. Provide the entry to record the revaluation surplus using (1) Proportional method and (2) Elimination
c. Determine the revised annual depreciation revaluation.
al method and (2) Elimination method.
Germs Co. determined the following information for the purpose of revaluing its building:

Historical Cost 24000000

Accumulated Depreciation 76800000
Actual Value 8 years
Replacement cost 32000000
Effective life 5 years
Remaining economic life 20 years
Depreciation method SLM
Income tax rate 30%

Requirements:
a. Compute for the revaluation surplus, net of tax.
b. Provide the entry to record the revaluation surplus using
(1) Proportional method and (2) Elimination method.
c. Determine the revised annual depreciation after the revaluation.
8. Phartz Co. revalued the following assets:
LAND BUILDING
Historical Cost 6000000 20000000
Accumulated Depreciation N/A -8000000
Fair Value 800000 16000000
Remaining Useful life N/A 10 years
Depreciation methid N/A SLM

Requirement: Compute for the total amount of revaluation surplus that is transferred directly to retained earnings
end of the first year following the revaluation date.
directly to retained earnings at the
9. In 20x1, Velch Co. acquired a piece of land for P5,000,000.Subsequent revaluations of the land are as follows:

DATE FAIR VALUE

Dec. 31,20x4 3800000
Dec. 31,20x7 700000
Dec. 31,20x9 4900000

Requirement: Provide the entries for the subsequent revaluations.

of the land are as follows:
On February 6, 20x1, Epol Co. acquired a machine for P4,000,000. Epol Co. estimated that the machine has
a useful life of 4 years and a residual value of P800,000. Epol Co. uses the sum-of-the-years' digits
method and prorates full-year depreciation to the nearest full month. On July 20, 20x3,
Epol Co. sold the machine for P1,800,000. Epol Co. incurred selling costs of P40,000.

Requirement: Compute for the gain (loss) on the sale.

that the machine has
years' digits