ACCOUNTING

CHANGES
ITEMS 6-10
Blue Company purchased a machine on January 1,2012 for
P6,000,000. At the date of acquisition, the machine had a life of six
years with no residual value. The machine is being depreciated on
straight-line bases. On January 1,2015, the entity determined that
the machine had a useful life of eight years from the date of
acquisition with no residual value.
What is the depreciation of the machine for 2015?
a. 750,000 b. 375,000 c. 500,000 d. 600,000
On January 1, 2011, Roma Company purchased equipment for
P4,000,000. The equipment has a useful life of 10 years and
residual value of P400,000. On January 1, 2015, the entity
determined that the useful life of the equipment is 12 years from
the date of acquisition and the residual value was P460,000.
What is the depreciation of the equipment for 2015?
a. 300,000 b. 262,500 c. 175,000 d. 360,000
Acute Company was incorporated on January 1, 2012. In preparing the financial
statements for the year ended December 31,2014, the entity used the following
original cost and useful life for the property, plant and equipment.

On January 1,2015, the entity determined that the remaining useful life is 10 years
for the building, 7 years for the machinery and 5 years for the furniture. The entity
used the straight line method of depreciation with no residual value.
What is the total depreciation for 2015?
a. 2,650,000 b. 3,500,000 c. 3,700,000 d. 2,550,000
On January 1, 2013, Milan Company purchased an equipment for
P6,000,000. The equipment had been depreciated using the
straight-line method with a residual value of P600,000 and useful
life of 20 years. On January 1,2015, the entity determined that the
remaining useful life is 10 years and the residual value is P800,000.
What is the depreciation for 2015?
a. 270,000 b. 546,000 c. 466,000 d. 582,500
 During 2015, Orca Company decided to change from the FIFO method of
inventory valuation to the weighted average method.

In the statement of retained earnings for 2015, what amount should be reported as the pretax
cumulative effect of this accounting change?
a. 1,000,000 deduction b. 1,000,000 addition c. 600,000 deduction d. 600,000 addition