CHANGE IN ACCOUNTING ESTIMATES

A.On January 1, 2014, Flair company purchased a machine for P2,600,000 and depreciated it by the
straight line using estimated life of 8 years with no residual value.

On January 1, 2017, the entity determined that the machine had a useful life of 6 years from the date of
acquisition with a residual value of P240,000.

What is the accumulated depreciation on December 31, 2017?

B. On January 1, 2015,Zee company purchased for P2,400,000 a machine with useful life of ten years
and no residual value. The machine was depreciated by the double declining balance method and the
carrying amount of the machine was P1,536,000 on December 31, 2016. The entity changed to the
straight line method on January 1, 2017.

What is the depreciation for 2017?

C. On January 1, 2015, Brazilia Company purchased for P4,800,000 a machine with useful life of ten
years and a residual value of P200,000. The machine was depreciated by the double declining balance
and the carrying amount of the machine was P3,072,000 on December 31, 2016.The entity change to
the straight line method on January 1, 2017. The residual value did not change.

What is the depreciation expense for 2017?

D. On January 1, 2017, Milan company determined that a revision in the estimate associated with the
depreciation of storage building was appropriate.

The building, purchased on January 1, 2015 for P6,000,000 had been depreciated using the straight line
method with an estimated residual value of P600,000 and an estimated useful life of 20 years.

The entity has determined that the expected remaining useful life of the storage building is 10 years
with an estimated residual value of P800,000.

What is the depreciation for 2017?

E. On January 1, 2013, Roma company purchased heavy duty equipment for P4,000,000. On the date of
installation, It was estimated that the equipment has a useful life of 10 years and a residual value of
P400,000.

On January 1, 2017, the entity decided to review the useful life of the equipment and the residual value.
The entity determined that the useful life of the equipment was 12 years from the date of acquisition
and the residual value was P460,000.

What is the depreciation expense for 2017?