Professional Documents
Culture Documents
The Following Transactions Occurred During 201G:: Property of STI
The Following Transactions Occurred During 201G:: Property of STI
The Following Transactions Occurred During 201G:: Property of STI
QUIZ
Determine the requirement for each problem. Show your computations. (9 items x 5 points)
Case 1
Shown below are the Machinery and Equipment and Delivery Equipment accounts of the KAYA MO YAN
COMPANY. One-half year’s depreciation is charged in the year of acquisition and/or disposition for these
assets. The client uses the straight-line method of depreciation.
a. A 201G Isuzu Truck was purchased for P1,200,000 in June. In the same month, a 201A Fuso Truck was sold
for P150,000. The truck was purchased in April 201C at the cost of P630,000.
b. In June, a drill press was purchased for P33,000. Freight-in was P3,000. A drill press purchased by the client
in March 201C for P30,000 was sold in June at a gain of P7,000.
c. One milling machine was purchased in July at the cost of P225,000. Installation cost, which was paid by
the clients and charged to Miscellaneous Expenses, amounted to P10,500.
d. While analyzing the Miscellaneous Income Account, your assistant found that the proceeds of P1,500 from
the sale of an electric welding machine has been credited to this account. The machine, acquired in March
201B, had a cost of P12,000. The machine was sold in September 201G.
Machinery and Equipment
1/1/201G Bal. 450,000 June CR 30,000
June VR 36,000
July VR 225,000
Delivery Equipment
1/1/201G Bal. 2,850,000 7-Jun CR 150,000
3-Jun VR 1,200,000
Based on the proceeding information, determine the following by encircling the correct letter.
1. Proceed from the sale of a drill press in June 201G
A. P7,000 B. P0 C. P11,000 D. P25,000
3. Total depreciation expense for the year ended December 31, 201G
A. P683,475 B. P882,150 C. P484,800 D. P682,800
Case 2
On January 1, 201A, RFM COMPANY acquired factory equipment at the cost of P150,000. The equipment is
being depreciated using the straight-line method over its projected useful of 10 years. On December 31, 201B,
a determination was made that the asset’s recoverable amount was only P96,000. Assume that this was
properly computed and that recognition of impairment was warranted. On December 31, 201C, the asset’s
recoverable amount was determined to be P111,000, and management believes that the impairment loss
previously recognized should be revised. You have been asked to assist the company’s accountant in the
application of PAS 36, the standard on impairment of assets.
3. What would have been the asset’s carrying amount at December 31, 201C, had the impairment not been
recognized in 201B?
A. P105,000 B. P84,000 C. P96,000 D. P86,400
4. What amount of impairment recovery should be reported in the 201C income statement?
A. P27,000 B. P0 C. P6,000 D. P21,000