Problem 16(Sale of PPE) Olongapo Corporation owns machinery that cost P20,000 when

purchased on July 1, 2009. Depreciation has been recorded at a rate of P2,400 per year,
resulting in a balance in accumulated depreciation of P8,400 at December 31, 2012. The
machinery is sold on September 1, 2013, for P10,500. Required: Prepare journal entries to
update depreciation for 2013 and record the sale. Problem 17(Depletion) Abra Co. acquired the
right to use 1,000 acres of land in Tanay, Rizal to mine for silver. The lease cost is P500,000, and
the related exploration costs on the property are P1,000,000. Intangible development costs
incurred in opening the mine are P8,500,000. Abra estimates that the mine will provide
approximately 1,000,000 ounces of silver. Required: Compute the depletion expense for the
first year of operation assuming that Abra were able to extract 250,000 ounces of silver.
Problem 18(Depletion) On January 1, 2012, Samar Company paid P5,400,000 for property
containing natural resources of 2,000,000 tons of ore. The present value of the estimated cost
of restoring the land after the resource is extracted is P450,000 and the land will have a value of
P650,000 after it is restored for suitable use. Tunnels, bunk houses, and other fixed installations
are constructed at a cost of P8,000,000 and such expenditures are charged to mine
improvements. Operations began on January 1, 2013, and resources removed totaled 600,000
tons. During 2014, a discovery was made indicating that available resource after 2014 will total
1,875,000 tons. At the beginning of 2014, additional bunk houses were constructed in the
amount of P770,000. In 2014, only 400,000 tons were mined because of a strike. Required: 1.
What amount should be recorded as depletion for 2014? 2. What amount should be recorded
as depreciation for 2014? Problem 19(Revaluation) On January 1, 2008, Nueva Corporation
acquired an equipment at a cost of P5,000,000. The equipment has been depreciated using the
straight-line method and a 20 year useful life without any salvage value. On January 1, 2013, an
appraisal report showed that the equipment’s replacement cost amounted to P 8,000,000 with
no change in useful life. Required: (Ignore the effect of taxes) 1. What amount should be
credited to revaluation surplus at January 1, 2013? 2. What is the total depreciation expense for
2013? 3. What is the balance of the revaluation surplus that will be reported in the equity
section of the Statement of Financial Position at December 31, 2013? Problem 20(Revaluation)
Davao Corporation provided the following information pertaining to its equipment that the
company is planning to revalue at January 1, 2013. Cost Replacement Cost Equipment P
6,500,000 P 9,200,000 Residual Value 500,000 200,000 Useful life 12 The equipment was
purchased on January 1, 2011 and was sold on December 31, 2013 for P 8,000,000. Required:
(Ignore the effect of taxes) 1. What is the revaluation surplus on January 1, 2013? 2. What is the
depreciation for 2013? 3. What is the balance of the revaluation surplus at December 31, 2013?
4. What is the gain on sale of equipment on December 31, 2013? Problem 21 (Revaluation) On
January 1, 2011, Laguna Corporation purchased an equipment for P 40,000,000. The equipment
is depreciated using the straight-line method and a 40 years useful life with no residual value.
Laguna adopted the revaluation model for the equipment and has revalued such on January 1,
2012 for P 46,800,000 and again on January 1, 2014 for 55,500,000. Required: What is the
revaluation surplus on (a) January 1, 2012? And (b) January 1, 2014?