Problem 8

Total Contract Price P5, 026,000

Less: Property taxes for 2020 146,000
Adjusted cost of Land & Bld. 4,880,000
%applicable to land 20%
Cost of Land P 976,000 (1)

Cost allocated to BLD (P4,880,000x80%) P3,904,000

Reconditioning costs prior to use 236,800
Salvage proceeds from demolition of garages (36,000)
Construction cost of warehouse 540,800
Cost of Buildings P 4,645,600 (2)

Fair Value of Equipement acquired on Mar. 1 P 200,000

Fair Value of Machine acquired on April 1 360,000
Cost of Machinery and Equipment P 560,000 (3)

Parking lots P 360,000

Waiting sheds 76,800
Cost of Land Improvements P 436,800 (4)

Land P 976,000
Buildings 4,645,600
Machinery and Equipment 560,000
Land Improvements 436,800
Total Cost of PPE P 6,618,400 (5)
Problem 9
Entries:
Machinery and equipment 369,000
Cash 369,000
Automobile and trucks 25,000
Cash 25,000
Cash 23,500
Accumulated depreciation 24,750
Automobile and trucks 48,000
Gain on sale 250 (#1)

Accumulated depreciation - 12/31/16 18,000

Depreciation - 9 mos. (P30,000 x 30% x 9/12) 6,750
Total 24,750

Cash 4,000
Accumulated depreciation 14,025
Machinery and equipment 17,000
Gain on sale 1,025 (#2)

Machinery and Equipment:

Balance, beg. P 1,380,000
Acquired, 7/1 (325,000+44,000) 369,000
Machine sold,12/20 (17,000) P 1,732,000
Automobiles and trucks:
Balance, Beg. P 200,000
Acquired, 8/30 25,000
Truck sold, 9/30 (48,000) 187,000
Leasehold improvements 432,000
Property, Plant and Equipment, 12/31/16 P2,351,000 (#3)

Machinery and equipment - P1,380,000/10 years = P 138,000

P 369,000/10 years x 6/12 = 18,450 P 156,450
Leasehold improvement - P432,000/12 years = 36,000
Automobile and trucks - CV of unsold item P 65,680 x 30% = 19,702
Sold item - 30,000 x 30% x 9/12 = 6,750
Current purchase P25,000 x 30% x 4/12 = 2,500 28,952
Total depreciation expense P221,402 (#4)
Depreciation 221,402
Accumulated depreciation - mach. 156,450
Accumulated depreciation - auto. 28,952
Accumulated depreciation - improv. 36,000

Total cost of PPE, 12/31/16 P2,351,000

Less: Acc. Dep’r.12/31/16:
Machinery and Equipment:
Balance,1/1 367,500
Dep’r expense for 2016 156,450
Machine sold. 12/20 (14,025) ( 509,925)
Automobiles and Trucks:
Balance,1/1 114,326
Dep’r Expense for 2016 28,952
Truck Sold, 9/30 (24,750) ( 118,528)
Leasehold improvements
Balance,1/1 108,000
Dep’r Expense for 2016 36,000 ( 114,000)
Carrying Value, 12/31/06 P1,578,547 (#5)