Use the following information for items 1-5 13.

13. How much is the cost of sales for the year ended
O Company is involved in building and operating cruise ship. Each December 31, 2015?
ship is identified as a separate discrete job in the accounting 14. How much is the maximum amount that may be declared
records. At the end of 2014, O correctly reported 5,400,000 as as dividends at the end of the company’s fiscal year of
construction in progress on the following jobs. operation?
Ship Completion date (end of month) Accumulated cost,
12/31/14 Use the following information for items 15 and 16
340 October 31, 2014* 2,300,000 The following data relate on the plant assets account of S Company
341 June 30, 2015 1,150,000 at December 31, 2014:
342 September 30, 2015 1,200,000 A B C D
343 January 31, 2016 750,000 Original cost 175,000 255,000 400,000 400,000
*Ship 340 was completed and ready for use in October 2914 and Year 2009 2010 2011 2013
will be placed in service May 1, 2015. purchased
Construction cost for 2015, and the dates the expenditures were Useful life 10 years 75,000 15 years 10 years
made were as follows: hours
Ship Date Cost Salvage 15,500 15,000 25,000 25,000
341 April 1, 2015 1,200,000 value
342 May 1, 2015 1,600,000 Depreciatio SYD Activity Straight Double
343 July 1, 2015 2,200,000 n method line declining
344 September 1, 2015 810,000 Note: in the year an asset is purchased, S does not record any
345 November 1, 2015 360,000 depreciation expense on the asset. In the year an asset is retired or
O had the following general liabilities at December 31, 2915: traded in, S takes full year depreciation on the asset.
12%, 5- year with maturity date of 2017, 2,000,000 The following transaction occurred during 2015:
10% =, 10- year bonds maturity date 2020, 8,000,000 a. On May 5, asset P was sold for 65,000 cash
On January 1, 2015, O borrowed 2,000,000 specifically for the b. On December 31, it was determined that asset R had
construction of ship 343. The loan was for 3 years with interest at been used 10,500 hours during 2015.
13%. Based on the above and the result of your audit, calculate the c. On December 31, before computing depreciation expense
following for the year ended December 31, 2015. on asset T, the management of S, decided the useful life
1. Weighted average interest rate for the general liabilities remaining from 1/1/12 was 10 years
2. Capitalized interest on Ship 341 d. On December 31, it was discovered that a plant asset
3. Capitalized interest on Ship 342 purchased in 20145 had been expensed completely in that
4. Capitalized interest on Ship 343 year. This asset cost 110,000 and has useful life of 10
5. Total interest that O should capitalized years and no salvage value. Management has decided to
use the double declining balance for this asset, which can
Use the following information for item 6-9 be referred to as asset I.
On January 2, 2013, C Company purchased land for 450,000 from Based on the above and the result of your audit, compute for the
which it is estimated that 400,000 tons of ore could be extracted. It balance of the following:
estimates that it will cost 80,000 to retore the land, after which it 15. Total depreciation expense for 2015 (3 points)
could be sold for 30,000. 16. Adjusted balance of plant assets as of December 31, 2015
During 2013, the company mined 80,000 tons and sold 50,000 tons. (3 points)
During 2014, the company mined 100,000 tons and sold 120,000
tons. At the beginning of 2015, the company spent an additional Use the following information for items 17-21
100,000, which increased the reserves by 60,000 tons. In 2015, the O Company’s property, plant and equipment, accumulated
company mined 140,000 tons and sold 130,000 tons. The company depreciation and amortization balances at December 31, 2014 are:
uses FIFO cost flow assumption. Based on the above and the result Cost Acc. Dep.
of your audit, compute for the following (Round depletion rate to Land 275,000
two decimal places) Building 2,800,000 672,900
6. Depletion for 2014 Machinery and equipment 1,380,000 367,500
7. Depletion for 2015 Automobiles and trucks 210,000 114,326
8. Depletion included in 2015 cost of sales Leasehold improvements 432,000 108,000
9. Carrying amount of the natural resources as of December Additional information on depreciation methods and useful lives
31, 2015 follows:
Asset Depreciation Useful life
Use the following information for items 10-14 method
In connection with your audit of G Mining Company for the year Buildings 150% declining 25 years
ended December 31, 2015, you noted that the company purchased Machinery and equipment Straight line 10 years
for 16,640,000 mining property estimated to contain 12,800,000 Automobile and trucks 9all 120% declining 5 years
tons of ore. The residual value of the property is 1,280,000. acquired after 2012)
Building used in mine operations cost 1,280,000 and have estimated Leasehold improvements Straight line
life of 15 years with no residual value. Mine machinery cost Depreciation is computed to the nearest month. Salvage value of
2,560,000 with an estimated residual value of 512,000 after its depreciable assets are immaterial except for automobiles and trucks
physical life of 4 years. which have estimated salvage values equal to 15% of cost. Other
Following is the summary of the company’s operations for first year additional information are as follows:
for operations: a. O entered into 12 year operating lease starting January 1,
Tons mined 1,280,000 tons 2012, the leasehold improvements were completed on
Tons sold 1,024,000 tons December 31, 2011 and the facility was occupied on
Unit selling price per ton 4.40 peso January 1, 2012.
Direct labor 1,024,000 b. On January 6, 2015, O completed its self-construction of a
Miscellaneous mining overhead 204,800 building on its own land. Direct cost of construction were
Operating expenses (expenses depreciation) 921,600 1,085,000. Construction of the building required 15,000
Inventories are valued on the FIFO basis. Depreciation on the direct labor hours. O construction department has an
building is to be allocated as follows: 20% to operating expense, overhead allocation system outside jobs based on an
80% to production. Depreciation on machinery is chargeable to activity denominator of 100,000 direct labor hours,
production. Based on the above and the result of your audit, answer budgeted fixed cost of 2,500,000 and budgeted variable
the following: cost of 27 per direct labor hour.
10. How much is the depletion for 2015? c. On July 1, 2015, machinery and equipment were
11. Total inventoriable depreciation for 2015 purchased at a total invoice cost of 325,000. Additional
12. How much is the inventory as of December 31, 2015? cost of 23,000 to rectify damage on delivery and 18,000
 for concrete embedding of machinery were incurred. A
wall had to be demolished to enable a large machinery to
be moved into the plant. The wall demolition cost 7,000
and rebuilding of the wall cost 19,000.
d. On August 30, 2015 O purchased a new automobile
costing 25,000
e. On September 30, 2015, a truck with a cost of 48,000 and
a carrying amount of 30,000on December 31, 2014 was
sold for 23,500
f. On November 4, 2015, O purchased a tract of land for
investment purposes for 700,000. O thinks it might use
the land as a potential future building site.
g. On December 20, 2015, a machine with a cost of 17,000,
a carrying amount of 2,975 on date of disposition and a
market value of 4,000 was sold to a corporate officer.
Based on the above and the result of your audit, compute for the
following as of and for the year ended December 31, 2015:
17. Total depreciation
18. Carrying amount of building
19. Carrying amount of machinery and equipment’
20. Carrying amount of automobiles and trucks
21. Carrying amount of property, plant and equipment