CHAPTER 5

PROPERTY, PLANT AND EQUIPMENT

PROBLEMS

5-1 (Uy Company)

Land (6,750,000 x 2,187,500/5,625,000) 2,625,000
Office building (6,750,000 x 2,000,000/5,625,000) + 120,000 2,520,000
Warehouse (6,750,000 x 937,500/5,625,000) 1,125,000
Manager’s residence (6,750,000 x 500,000/5,625,000) 600,000

5.2 (Chang Corporation)

a. 720,000 x .90 P648,000
b. Down payment P150,000
Present value of 24 monthly installments
25,000 x 21.24 531,000
Total P681,000

5-3 (Urban Corporation)

Land
Land Improvements Building
Land purchase P2,000,000
Demolition of old building 300,000
Legal fees for land acquisition 150,000
Building permit fees P 80,000
Interest on loan for construction 270,000
Building construction costs 5,000,000
Assessment by the city government for sewer
connection 120,000
Landscaping costs* P350,000
Equipment purchased of use in excavation 800,000
Fixed overhead allocated to building
construction 100,000
Salvage from the demolished building (70,000)
Sale of excavation equipment (640,000)
Total costs P2,500,000 P350,000 P5,610,000

Compensation for injury to construction worker is chargeable to loss; this expenditure could have
been avoided had the company obtained insurance on its workers. If an insurance was acquired,
the amount of premiums paid may be charged to the building being constructed.

Profit on construction is not recognized anywhere in the accounts. The self-constructed asset
should be charged for the actual costs incurred in its completion.

Modifications to the new building per instruction by the building inspectors is charged to loss
since this expenditure is not a necessary expense for the asset. This was incurred as a result of
the company’s negligence and could have been avoided had proper planning been done.

*Landscaping costs may be charged to the land account if there is an indication that such an
expenditure is permanent in nature.
Chapter 5- Property, Plant and Equipment

5-4 (Doy Company)

Purchase price of land P4,000,000
Payments to tenants to vacate premises 200,000
Demolition of old building 100,000
Legal fees for purchase contract and recording ownership 50,000
Title guarantee insurance 20,000
Proceeds from sale of salvaged materials (10,000)
Total P4,360,000

5-5 (Yu Corporation)

Land Machinery and
Improvements Buildings Equipment
Balances, December 31, 2006 P 10,000 P 900,000 P 980,000
Cost of fencing the property 110,000
Paid to a contractor for building erected 2,000,000
Building permit fee 20,000
Excavation expenses 50,000
Architect’s fees 50,000
Invoice cost of machines acquired 2,000,000
Freight, unloading and delivery charges 60,000
Custom duties and other charges 140,000
Allowances, etc. to technicians during
installation 400,000
Balances, December 31, 2007 P120,000 P3,020,000 P3,580,000

The interest of P150,000 is an imputed interest and is not recognized anywhere in the financial
statements.

The royalty payments of machines purchased is charged to operating expense for the period.

5-6 a. Cash price P215,000

b. Downpayment P 50,000
Notes payable (35,000 x 3.1699) 110,947
Preference shares (500 x 110) 55,000
Cost of machine P215,947

c. Purchase price P22,000,000

Appraisal cost 150,000
Total cost to be allocated P22,150,000
Allocation:
Land 22,150,000 x 10,000/25,000 P 8,860,000
Building 22,150,000 x 12,500/25,000 P 11,075,000
Equipment 22,150,000 x 2,500/25,000 P 2,215,000

d. Cash price
800,000 x .90 x .98 P705,600
Present value of the disposal costs
50,000 x 0.5019 25,095
Cost of equipment P730,695

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Chapter 5- Property, Plant and Equipment

5.7 (Planters Company and Producers Company)

Books of Planters Company

Cash 50,000
Equipment 350,000
Accumulated Depreciation-Building 540,000
Loss on Exchange of Building 60,000
Building 1,000,000
1,000,000-540,000 = 460,000 book value
460,000 – 400,000 = 60,000 loss

Books of Planters Company

Building 400,000
Accumulated Depreciation-Equipment 320,000
Cash 50,000
Gain on Exchange of Equipment 70,000
Equipment 600,000
600,000-320,000 = 280,000
280,000 – 350,000 = 70,000 gain

5-8 (Far East Company)

a. Direct materials P220,000
Direct labor 150,000
Overhead costs (125% x 150,000 187,500
Allocated fixed costs (20% 700,000) 140,000
Total before interest cost P697,500
Capitalized interest: (300,000 x 10% x 6/12) 15,000
Total cost of equipment P712,500

b. Average accumulated expenditures: (697,500/2) P348,500

Capitalized interest:
300,000 x 10% x 6/12 P 15,000
48,750 x 16% x 6/12 3,900
Total capitalized interest P 18,900

5-9 (Metro Company)

a. 4,000,000 x 10% P400,000
Less interest income earned on temporary investment of loan ( 85,000)
Capitalized interest P315,000

b. 1,000,000 x 10% P100,000

1,000,000 x 10% x 9/12 75,000
1,000,000 x 10% x 6/12 50,000
1,000,000 x 10% x 3/12 25,000
Total interest P250,000
Less interest income earned on temporary investment of loan 40,000
Capitalized interest P210,000

c. Computation of average accumulated expenditures:

400,000 x 12/12 P 400,000
1,000,000 x 9/12 750,000
1,200,000 x 5/12 500,000
1,000,000 x 3/12 250,000
400,000 x 0/12 ----------

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Average accumulated expenditures P1,900,000

Computation of weighted average interest rate:

(10% x 1,200,000) + (12% x 1,600,000) 11.14%
1,200,000 + 1,600,000
Interest of specific borrowing:
1,600,000 x 10% P160,000
Less interest earned 20,000 P140,000
Interest on general borrowing:
300,000 x 11.14% 33,420
Capitalized interest P173,420

d. 2,800,000 x 10% P280,000

1,600,000 x 10% 160,000
2,000,000 x 12% 240,000
Total interest on loans P680,000
Less capitalized interest: (1,900,000 x 10.625%*) 201,875
Interest expense for 2006 P478,125

* 680,000 ÷ 6,400,000 = 10.625%

5-10 (Lim Company)

360,000 x 12/12 P 360,000
600,000 x 7/12 350,000
1,500,000 x 6/12 750,000
1,500,000 x 1/12 125,000
Average accumulated expenditures P1,585,000

a. Interest of specific borrowing (3,000,000 x 12%) P 360,000

Less interest revenue earned from temporary investments of
specific borrowing 49,000
Capitalized interest P 311,000

b. Interest on specific borrowing (1,200,000 x 12% ) P 144,000

Less interest revenue earned from temporary
investments of specific borrowing 49,000
P
95,000
Interest on general borrowings
385,000* x 12.14%** 46,739
Capitalized interest P 141,739

* 1,585,000 – 1,200,000 = 385,000

** 680,000 ÷ 5,600,000 = 12.14%

5-11 a.
Tooling Machine 172,800
Automobile 135,000
Gain on Exchange of Automobile 37,800
b.
Machine (new) 1,200,000
Accumulated Depreciation-Machine (old) 340,000
Loss on Exchange of Machine 190,000
Machine (old) 850,000

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Cash 880,000
(850,000–340,000)-(1,200,000–880,000)=190,000 loss

5-12 (Tan Company)

a. Depreciation charges for 2005 and 2006
2005 2006
a. SL (800,000 – 80,000) / 8 = 90,000
90,000 x 9/12= 67,500 90,000
b. Hrs 720,000/100,000 hrs = 7.20/hr.
worked 7.20 x 4,500 hrs = 32,400 7.20 x 5,500 hrs = 39,600
c. Units of 720,000/900,000 units = 0.80/unit
output 080 x 40,000 units = 32,000 0.80 x 60,000 units = 48,000
d. SYD 720,000 x 8/36 x 9/12 = 120,000 720,000 x 7.25/36 =145,000
e. DDB 2/8 = 25% 800,000-150,000=650,000
25% x 800,000 x 9/12=150,000 25% x 650,000 = 162,500
f. 150% 1.5/8 = 18.75% 800,000-112,500=687,500
DB 18.75% x 800,000 x 9/12= 112,500 18.75% x 687,500) =
128,906

b. Carrying amount of the asset at the end of 2006

Depreciation Method Cost Accum. Depr. Carrying amount
a. Straight-line 800,000 157,500 642,500
b. Hours worked 800,000 72,000 728,000
c. Units of output 800,000 80,000 720,000
d. SYD 800,000 265,000 535,000
e. DDB 800,000 312,500 487,500
f. 150% declining balance 800,000 241,406 558,594

5-13 (Real Company)

a. 2/5 = 40%; 26,400 ÷ 40% = 66,000
b. 12,000 x 5 years = 60,000; 66,000 – 60,000 = 6,000
c. Carrying amounts, end of year 3
Straight-line (66,000 – 36,000) = P30,000
Sum-of-the-years digits(66,000 – 48,000) = P18,000
Double-declining balance (66,000 – 52,744) = P13,256

The method with the lowest carrying amount at time of sale will yield the highest amount
of gain on disposal. Therefore, the double-declining balance method will provide the
highest gain on disposal at the end of year 3.

5-14 (De Oro Company)

a. Method 1 - Straight-line method
Method 2 - Sum-of-the-years digits method
320,000 ÷ 80,000 = 4 year life
320,000 x 4/10 = 128,000
320,000 x 3/10 = 96,000
Method 3 - 150% declining-balance method
1.5 ÷ 4 = 37.5%
37.5% x 340,000 = 127,500
37.5% x (340,000-127,500) = 79,688

b. Straight line method P80,000

Sum-of-the-years digits method

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Chapter 5- Property, Plant and Equipment

320,000 x 2/10 64,000

150% declining balance method
37.5% x (340,000-127,500-79,688) 49,804

5-15 (Citi Company)

a. Depreciation Expense for 2006
Double-declining balance method
800,000 x 25% x ½ P100,000
Sum-of-the-years digits method
720,000 x 8/36 80,000

b. Carrying (book) value at December 31, 2007

Double-declining balance method

Date Depreciation Expense for the year CV, end
12/31/06 800,000 x 25% X ½ = P100,000 P700,000
12/31/07 700,000 x 25% = 175,000 525,000

Sum of the years’ digit method

Cost P800,000
Accumulated Depreciation, 12/31/07 (720,000 x 10.5/36) 233,333
Carrying value, 12/31/07 P566,667

5-16 (Total Company)

1. The company changes to the sum-of-the-years digits method
Cost P1,200,000
Less accumulated depreciation (1,100,000 ÷ 10) x 4 440,000

Carrying amount of the asset, beginning of 5th year P 760,000

Revised depreciation for the 5th year
760,000-100,000 = 660,000; 660,000 x 6/21 P 188,571

2. It was estimated that the asset’s remaining life is 5 years.

Revised depreciation for the 5th year
(760,000 – 100,000) / 5 years P 132,000

5-17 (Chartered Company)

Cost P 32,000
Less accumulated depreciation 30,000 x (5+4) / 15 18,000
Carrying amount, January 1, 2007 P 14,000

Depreciation expense for 2007 (14,000 x 7/28) P 3,500

5-18 (Standard Company)

Cost P500,000
Less accumulated depreciation:
2003 20% x 500,000 100,000
2004 20% x 400,000 80,000
2005 20% x 320,000 64,000
2006 20% x 256,000 51,200 295,200
Carrying amount, January 1, 2007 P204,800
Depreciation expense for 2007
204,800 – 10,000 = 194,800; 194,800 ÷ 5 years P 38,960

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Chapter 5- Property, Plant and Equipment

5.19 (Koh Trading)

(Correction to the text: and the carrying amount of the machine was P153,600 on
December 31, 2006, instead of 2007)
Carrying amount of the asset, January 1, 2007 P153,600
Estimated remaining life in years ÷ 8
Depreciation expense for year ended December 31, 2007 P 19,200
5-20 (Carmi Company)
Cost P378,000
Less: Accumulated Depreciation, August 1, 2007(378,000–35,000)/5 x 2 137,200
Carrying value, August 1, 2007 P240,800
Overhaul costs (capitalized) 80,000
Carrying value after overhaul P320,800
Depreciation (August – December, 2007, see below 22,567
Carrying value, December 31, 2007 P298,233

Depreciation for 2007

(378,000 – 35,000)/5 x 7/12 P40,017
(320,800 – 50,000) / (5 – 2) + 2 = 270,800 / 5 x 5/12 22,567
Total P62,584

5-21 (Chu, Inc.)

Accumulated depreciation at January 1, 2006 (528,000 x 4/8) P264,000
Revised depreciation expense for 2006
528,000-264,000 = 264,000; 264,000 / 2 yrs. 132,000
Accumulated depreciation at December 31, 2007 P396,000

5-22 (Allied Company)

Purchase price P4,450,000
Residual value ( 650,000)
Development costs incurred and capitalized during 2005 750,000
Depletable cost P4,550,000
Estimated supply of mineral resources ÷3,500,000
Depletion expense per ton P 1.30
Number of tons removed during 2006 x 550,000
Depletion expense for 2006 P 715,000
Depletable cost, January 1, 2006 (see above) P4,550,000
Less depletion expense for 2006 ( 715,000)
Add development costs incurred and capitalized during 2007 961,000
Depletable cost for 2006 P4,796,000
Revised estimated supply of mineral resource, 2007 ÷4,360,000
Revised depletion rate per ton P 1.10
Number of tons removed during 2007 700,000
Depletion expense for 2007 P 770,000

5.23 (Ong Exploration Company)

Purchase price P45,000,000
Development costs 1,500,000
Salvage value ( 6,000,000)
Restoration costs at present value (2,500,000 x 0.4632) 1,158,000
Depletable cost P41,658,000
Estimated recovery from the property ÷10,000,000
Depletion rate per metric ton P 4.1658
Resources extracted during 2006 x 1,000,000
Depletion expense for 2006 P 4,165,800
Depletable cost, 2006 (see above) P41,658,000

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Depletion expense for 2006 ( 4,165,800)

Development costs 750,000
New depletable cost for 2006 P38,242,200
Remaining number of metric tons (9,250,000-1,000,000) ÷ 8,250,000
Revised depletion per metric ton (rounded) P 4.64
Number of metric tons removed during 2007 x 1,500,000
Depletion expense for 2007 P 6,960,000

5.24 (Family Mining Company)

Depletion rate per ton:
4,000,000 + 400,000 – 200,000
1,400,000 tons P3.00
Depreciation expense per ton:
300,000 – 20,000
1,400,000 tons P0.20

a. Cost of ending inventory

2,000 units x 6 months 12,000
Production cost per unit
(8.00 + 3.00 + 0.20) x 11.20
Ending Inventory, December 31, 2006 P134,400

b. Cost of goods sold

18,000 units x 6 months 108,000
Production cost per unit x 11.20
Cost of goods sold for 2006 P1,209,600

c. Depletable cost in 2006 P4,200,000

Less depletion expense for 2006
20,000 units x 6 months 120,000
Depletion rate per ton x 3.00 360,000
New depletable cost for 2007 P3,840,000
Revised estimated recovery at January 1, 2007 ÷ 800,000
Revised depletion rate for 2007 P 4.80

Depreciable cost in 2006 P 280,000

Less depreciation expense for 2006 (120,000 units x 0.20) 24,000
Depreciable cost for 2007 P 256,000
Revised estimated recovery at January 1, 2007 ÷ 800,000
Revised depreciation rate for 2007 P 0.32

5-25 (Yap Machine Shop)

a.
1. Cash 1,700,000
Accumulated Depreciation-Building 450,000
Loss on Disposal of Assets 150,000
Land 800,000
Building 1,500,000

2. Cash 120,000
Accumulated Depreciation-Equipment 250,000
Loss on Disposal of Assets 30,000
Equipment 400,000

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Chapter 5- Property, Plant and Equipment

3. Equipment 298,000
Cash 298,000

4. Land 8,000,000
Income from Donated Asset 7,800,000
Cash 200,000

5. Land 240,000
Cash 240,000

6. Equipment 150,000
Accumulated Depreciation-Equipment 15,000
Gain on Disposal of Assets 22,000
Equipment 40,000
Cash 103,000

7. Building 28,000,000
Cash 28,000,000

b.
Property, Plant and Equipment (Net)
Beginning balance 2,150,000 (1) 1,850,000
(3) 298,000 (2) 150,000
(4) 8,000,000
(5) 240,000
(6) 125,000
(7) 28,000,000
Total 38,813,000 Total 2,000,000
Balance 36,813,000

5-26 (Pat Corporation)

a. Depreciation and amortization expense for year ended December 31, 2007
Buildings
1.5/25 = 6%; (12,000,000-2,631,000) x 6% P 562,140
Machinery and Equipment
Based on beginning balance (9,000,000 x 10%) 900,000
Less depreciation of machine destroyed
230,000 x 10% x 9/12 17,250 P 882,750
New machine
2,800,000 + 50,000 + 250,000=310,000
3,100,000 x 10% x 6/12 155,000
Total P1,037,750
Automotive Equipment
Based on beginning balance 180,000
Less depreciation of car traded 180,000 x 2/10 36,000 P 144,000
New car
240,000 x 4/10 96,000
Total P 240,000
Leasehold Improvement
1,680,000 x 8/80 P 168,000

b. Gain ( loss) from disposal of assets

Car traded in
Fair value of car traded in

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Chapter 5- Property, Plant and Equipment

(240,000 – 200,000) P 40,000

Book value of car traded 54,000 P(14,000)
Machine destroyed by fire
Insurance recovery P155,000
Book value of machine (230,000 x 4/10 ) 92,000 63,000
Net gain from disposal of assets P 49,000

5-27
a.
1/1/06 Equipment 2,000,000
Revaluation Surplus 1,200,000
Accumulated Depreciation 800,000
3,600,000-2,400,000 = 1,200,000 (50% Inc.)
50% x 4,000,000 = 2,000,000
50% x 1,600,000 = 800,000
b.
12/31/06 Depreciation Expense 600,000
Accumulated Depreciation-Equipment 600,000
3,600,000 ÷ 6 yrs = 600,000

12/31/06 Revaluation Surplus 200,000

Retained Earnings 200,000
1,200,000 ÷ 6 yrs = 200,000

12/31/07 Depreciation Expense 600,000

Accumulated Depreciation-Equipment 600,000

12/31/07 Revaluation Surplus 200,000

Retained Earnings 200,000
c.
1/1/08 Accumulated Depreciation-Equipment 600,000
Revaluation Surplus 400,000
Equipment 1,000,000

12/31/08 Depreciation Expense 500,000

Accumulated Depreciation-Equipment 500,000
2,000,000 ÷ 4 yrs = 500,000

Revaluation Surplus 100,000

Retained Earnings 100,000
1,200,000-200,000-200,000-400,000=400,000
400,000 ÷ 4 yrs = 100,000

Original 1/1/06 1/1/06 06-07 12/31/07 1/1/08 1/1/08 12//31/08

Cost 4.000M +2.00M 6.000M - 6.00M -1.00M 5.00M 5.00M
Accum 1.600M +0.80M 2.400M +1.20M 3.60M -0.60M 3.00M 3.50M
CV 2.400M +1.20M 3.600M -1.20M 2.40M -0.40M 2.00M 1.50M

5.28 (Lu Company)

2007

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Chapter 5- Property, Plant and Equipment

Jan. 1 Impairment Loss - Machinery 131,250

Accumulated Depreciation-Machinery 131,250
(450,000 ÷ 8 yrs) x 3 yrs. = 168,750
500,000 – 168,750 = 331,250
331,250 – 200,000 = 131,250
Dec. 31 Depreciation Expense 90,000
Accumulated Depreciation-Machinery 90,000
(200,000 – 20,000)÷ 2 yrs. = 90,000

MULTIPLE CHOICE QUESTIONS

Theory
MC1 d MC11 b MC21 c
MC2 c MC12 d MC22 b
MC3 a MC13 b MC23 c
MC4 d MC14 d MC24 c
MC5 d MC15 d MC25 c
MC6 d MC16 d
MC7 c MC17 c
MC8 b MC18 a
MC9 b MC19 b
MC10 d MC20 d

Problems
MC26 d
MC27 d 14,400,000 x 5/20 = 3,600,000
MC28 c 200,000 + 3,000 + 6,000 = 209,000
MC29 c (800,000 – 20,000) x 12/78 x 9/12 = 90,000
MC30 c 780,000 x 11.25/78 = 112,500; 90,000 + 112,500 = 202,500
800,000 – 202,500 = 597,500
MC31 a 4,500,000 + 30,000 + 6,000 + 40,000 + 60,000 = 4,636,000 Land
10,000 + 50,000 + 90,000 + 45,000 + 150,000 + 9,800,000 = 10,145,000 Building
MC32 c 1,800,000 x 10% = 180,000; 180,000 – 45,000 = 135,000
2,500,000 – 1,800,000 = 700,000
700,000 x 9% = 63,000; 135,000 + 63,000 = 198,000
MC33 c 4,000,000 x 10% x 6/12 = 200,000
750,000 x 12% x 6/12 = 45,000; 200,000 + 45,000 = 245,000
MC34 c 1,000,000 + (4,000,000÷ 2) = 3,000,000; 2,000,000 x 10% = 200,000
1,000,000 x 11% = 110,000; 200,000 + 110,000 = 310,000
MC35 a 4,500,000 + 1,320,000 + 77,000 + 53,000 = 5,950,000 total depreciable cost
112,500 + 66,000 + 9,625 + 13,250 = 201,375 total depreciation expense
5,950,000 ÷ 201,375 = 29.5 yrs.
MC36 a 4,800,000 + 1,400,000 + 82,000 + 53,000 = 6,335,000 total cost
201,375 ÷ 6,335,000 = 3.18%
MC37 d 4,500,000 ÷ 40 yrs. = 112,500
MC38 c 77,000 x 6/36 = 12,833
MC39 a 240,000 – 12,000 = 228,000; 228,000 ÷ 120 mos = 1,900 per mo
1,900 x 63 mos = 119,700
240,000 – 119,700 = 120,300; 120,300 – 130,000 = 9,700

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MC40 c 270,000 x (8+7)/36 = 112,500

270,000 ÷ 8 = 33,750; 33,750 x 2 = 67,500
112,500 – 76,500 = 45,000
MC41 b 1.5/5 = 30% depreciation rate; 600,000 x 30% x ½ = 90,000
600,000 – 90,000 = 510,000; 510,000 x 30% = 153,000
MC42 a 90,000 x (5+4+3)/15 = 72,000 reported accum depreciation under SYD
90,000 x 2/15 = 12,000
MC43 b 240,000 ÷ 40 = 6,000; 240,000 x .90 x.90 x .10 = 19,440; 72,000 x 2/10 = 14,400
MC44 c 160,000/4 = 40,000; 400,000/40,000 = 10 years
240,000 – 40,000 = 200,000; 200,000 – 65,000 = 135,000
MC45 d (900,000 – 300,000) / 3 yrs = 100,000
600,000 + 100,000 = 700,000
MC46 a 900,000 – 420,000 = 480,000; 480,000 – 300,000 = 180,000
MC47 d 42,000 x 55 = 2,310,000; 2,310,000/7 = 330,000; 330,000 + 5,000 = 335,000
MC48 c 49,200,000 – 43,755,000 = 5,445,000; 5,445,000 ÷ 4.5 years = 1,210,000/yr
1,210,000 x 40 yrs = 48,400,000; 49,200,000 – 48,400,000 = 800,000
MC49 b 20,500 – 6,000 = 14,500; 14,500 – 16,800 = 2,300
MC50 b 40,000 – 30,000 = 10,000; 20,000 – 10,000 = 10,000 Gain
MC51 c 54,000,000 – 6,000,000 + 7,200,000 = 55,200,000; 55,200,000 ÷ 2,400,000 = 23
MC52 a 3,400,000 – 200,000 + 800,000 = 4,000,000
4,000,000 ÷ 4,000,000 = 1.00 per ton; 1.00 x 375,000 tons = 375,000
MC53 d P0 for Quarry No. 1 since the asset is only being leased.
1,000,000 – 300,000 = 700,000; 700,000 ÷ 100 M = 0.007 per ton
0.007 x 1,380,000 = 9,660
MC54 b .007 x 40,000,000 = 280,000; 700,000 – 280,000 = 420,000
420,000 ÷ 20,000,000 = 0.21; 0.21 x 1,380,000 = 28,980
MC55 b 3,600,000 ÷ 800,000 = 4.50; 4.50 x 60,000 = 270,000
96,000 – 6,000 = 90,000; 90,000 ÷ 800,000 = 0.1125
0.1125 x 60,000 = 6,750
MC56 c (8,600,000-600,000) ÷ 40 yrs = 200,000; 200,000 x 5 yrs. = 1,000,000
8,600,000-1,000,000-600,000 = 7,000,000; 7,000,000 ÷ 30 yrs = 233,333
MC57 d 8,000,000 – 1,000,000 – 233,333 = 7,366,667
7,500,000 – 7,366,667 = 133,333
MC58 c 160,000 x 10 yrs = 1,600,000; 4,000,000 – 1,600,000 = 2,400,000
3,240,000 – 2,400,000 = 840,000
MC59 b 4,000,000 ÷ 160,000 = 25 years; 25 – 10 = 15 years remaining
3,240,000 ÷ 15 = 216,000
MC60 b 160,000 x 9 yrs. = 1,440,000; 4,000,000 – 1,440,000 = 2,560,000
2,560,000 – 500,000 = 2,060,000; 2,060,000 ÷ 16 yrs. = 128,750
2,060,000 – 128,750 = 1,931,250; 3,240,000 – 1,931,250 = 1,308,950
160,000 – 128,750 = 31,250; 500,000 – 31,250 = 468,750
1,308,750 – 468,750 = 840,000
MC61 a (360,000 ÷ 6) x 2.5 yrs = 150,000
360,000 – 150,000 = 210,000 book value; 210,000 – 70,000 = 140,000 loss
MC62 d 70,000 ÷ 3.5 remaining years = 20,000; 70,000 – 20,000 = 50,000
MC63 c 1,800,000 – 600,000 = 1,200,000; 600,000 ÷ 3 = 200,000
1,200,000 + 200,000 = 1,400,000
MC64 c 3,000,000 – 300,000 = 2,700,000; 2,700,000 ÷ 10 = 270,000
270,000 x 4 = 1,080,000
3,000,000 – 1,080,000 = 1,920,000; 1,920,000 – 900,000 = 1,020,000
MC65 b 1,920,000 ÷ 6 yrs = 270,000 or 2,700,000 ÷ 10 yrs = 270,000

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Chapter 5- Property, Plant and Equipment

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