| CPA REVIEW SCHOOL OF THE PHILIPPINES | Manila FINANCIAL ACCOUNTING AND REPORTING ‘VALINISTYIVALIX/ESCALA/SANTOSIDELA CRUZ | | DEPRECIATION AND DEPLETION 1. Anenity provided the flowing schedule of machinery: | | Total cost Residual value Usefl life Mastin | 5,500,000 00,000 2 MechineB | 2,000,000 200,000 {is Machine + | 400,000 r Se | a 133 | b. 160 | © 180 a 198 2. On Ape 1, 2019, an eaty purchased machinery fo 3,300,000. The machinery haan esate ‘sof i of five years with residual value of 300,000. Depreciation is computed by the sum ofthe yeu digs method, What is the depreciation for 2020? 850,000, 800,000 | ©. 600,000, 4. 700.000 3. Amenity purchased equipment on January 1, 2019 for PS,000,000. The equipment hada useful life of 5 years and residual value of P600,000. The policy ito depreciate S-year assets using the 200% ouble declining method for the first 2 years and then switch to straight line. Whst agount should ‘be reported as accumulated depreciation on December 31, 2021? 3,000,000 | i 3,800,000 | 3,920,000 1 i 3,600,000 4, Anceaity takes a fill year depreciation in the year of acquisition and no depreciation jn the year of ‘ispositin. Data relating oa depreciable asct on December 31,2018 are cost P5,500,000 residual ‘value P1000,000, accumulated depreciation P3,600,000 and wsefil life 5 yeas. The aset was acquired on July 1, 2016. Using the same deprecation method in 2016, 2017 and 2018, what ‘mount of depreciation should be reorded in 2019 i a. 1,100,000 6. 1200,000 «900,000 | 600,000 | 5. On January 1, 2019, an entity acquired en equipavent with an estimated useful life of 10 years and estimated residual value of PS0,000. The depreciation applicable to this equipment was P240,000 for 2021 computed under the sum of years’ digits ,method, What was the acquisition cost of | 6674Page 2 6 On Jamuary 1, 2019, a entity purchased mineral mine for 26,400,000 with removable ore estimated at 1,200,000 tons. Aer it has extracted all the ote, the entity willbe required by law to ‘estore the land tothe original condition at an estimated cost of P2,200,000, ‘The present valu of the estimated restoration cost is P1,800,000. The property can be sold flerwards for P3,000,00. During 2019, the entity incurred P2,000 CON exp'eration cost and P1,600,000 development cost ‘repating the mine for production. The entity removed 80,000 tons of ore and sold 60,000 tons of ‘ore in the current yar. ‘What amour’ of depletion should be included in cost of goods sold for the current year? 1,920,000 b. 140,000 . 1/300,000 4. 1590-000 7. 1n2018, an entity purchase property with minerl resources for P24 000,00. The property bad @ residual value of P5,000,00C. However, une en is required to estore the property to the original condition aa discounted amount of P2,000,000 In 2018, the entity spent P1,900,000 in development cost and P3,000,000 in buikiing. In 2019, on. ‘smount of 74,000,000 was spent for addtional development onthe mine Production began in 2019 and the tons extracted totaled 3,000,000 in 2019 and 2,500,000 in 2020, ‘The remaining tons totaled 7,000,000 on December 31, 2019 and 3,500,000 on December 31, 2020, 1. What amount of deptesion sould be resognized in 2019? 7,800,000 31900 000 8,800,000 9,000,600, 10,509,000 12,250,000, 9,625.00), 8.750.060 b. é 2. What amount of depletion should be reported for 20202 . 6 @ 8. On July 1. 2019, an entity purchased the righ 10 « mine for P20,000,000, of which P2,000,000 was allocable tothe land, Hstimared reserves were 1,500,000 tons. The entity expected to extract and sel 25,000 tons per nse, ‘The entity purchesed ming equipment on July 1, 2019 for P6,000,000. The mining equipment had 42 useful hie € years, Howexcr, after all the resource is removed, the equipment will be of no use ‘and will be sold for P500,000 1, What isthe depletion for 26199 3,600,000 b. 1,g0n.009 ©. 2,500,000 4. 1269.00 2, Whats the depreciation fur 20192 a 1,500,000 b. 1,000,000 750,060 a 468.789 END 6674