EXERCISE 1

LAND BUILDING

ALLOCATED COST FOR LAND 3, 500, 000

ORGANIZATION FEES PAID TO THE STATE 300, 000
CORPORATE ORGAN COST 500, 000
TITLE CLEARANCE FEES 100, 000
COST OF RAZING 200, 000
EXECUTIVE SALARIES NO CONS 1, 200, 000
LAND REAL STATE TAX 180, 000
COST IF NEW BUIL. 16, 000, 000
TOTAL COST OF LAND 4, 580, 000 17, 400, 000

EXERCISE 2 LAND BUILDING

PURCHASE OF LAND 7, 800, 000

LAND SURVEY 104, 000
FESS FOR SEAQRCH 12, 000
BUILDING 70, 000
TEMPORARY 215, 000
PAYMENT 92, 000
RAZING OLD 600, 000
SPECIAL ASSESMENT 45, 000
EXCAVATING 200, 000
COST PAVING 500, 000
COST OF SHRUB 660, 000
DAMAGES 168, 000
TOTAL COST OF NEW BUILDING

EXERCISE 3 (COMPLETE)

INVOICE PRICE (4, 480, 000 – 200, 000 -480, 000) ₱ 3, 800, 000
REFURBISHING COST DURING INST. ₱ 180, 000
TESTING AND TRAI COST ₱ 170, 000
CONSULKTATION ₱ 120, 000
SEAFETY RAILS ₱ 55, 000
REFURBIDHING CODT AFTER ₱ 230, 000
COOLING DEVICE ₱ 520, 000
TOTAL COST OF NEW MACHINE ₱ 5, 075, 000
EXERCISE 4 (COMPLETE)

SOLUTION:

Actual borrowing cost (10,000,000 x 11.25%) ₱ 1, 125, 000

less: interest income frm temporary investment ₱ 400, 000
capitalizable borrowing cost ₱ 475, 000

EXERCISE 5 (COMPLETE)

SOLUTION:
actual interest
Notes payable 10. 20% ₱ 6, 000, 000 x 10. 20 ₱ 612, 000
Notes payable 11. 80% ₱ 4, 500, 000 x 11. 80 ₱ 531, 000
₱ 10, 500, 000 ₱ 1, 143, 000

Capitalization rate ₱ 1, 143, 000 = 10. 89%

₱ 10, 500, 000

Actual borrowing cost ₱ 1, 143, 000

“computed borrowing cost (6, 250, 000 x 11.00) ₱ 687, 500

LOWER AMOUNT (capitalizable borrowing cost) ₱ 687, 500

Actual borrowing cost (₱6, 000, 000 x 10.20) ₱ 1, 143, 000

“computed borrowing cost” (₱3, 000, 000 x 10.20) ₱ 687, 500
interest expense ₱ 455, 500
EXERCISE 6 (COMPLETE)

SOLUTION:

Jan 3, 700, 000 x 12/12 3, 700,000

April 2, 100, 000 x 9/12 1, 575,000
October 1, 950, 000 x 3/12 475, 000
November 950, 000 x 2/12 161, 500
5, 911, 500

Notes payable 10. 75 3, 800, 000 x 10. 75 = 408, 500

Notes payable 11. 90 4, 000, 000 x 11. 90 = 476, 000
7, 800, 000 884, 500

Capitalization rate 884, 500 11. 34 %

7, 800, 000

Average expenditures5, 911, 500

for specific borrowings
3, 600, 000 x 11% = 396, 000
less: interest - - - - - - - -- - - - - - - -- - -- - -
for general borrowings
2, 311, 500
11. 34
computed BC 262 124
actual BC 884, 580
lower amount 262, 124 --------------- 262, 124
TOTAL CAP BORROWING COST 631, 124

Actual borrowing cost for general 884, 000

computed borrowing cost for general 262, 124
interest expense 621, 876
EXERCISE 7

REQUIREMENT 1:

480, 000, 000

REQUIREMENT 2;

2018
Cash 320, 000, 000
deferred grant income 320, 000, 000
TO RECORD THE RECIPT OF GRANT FROM
GOVERN.

Environment expense 90, 000, 000

cash 90, 000, 000
TO RECORD THE PAYMENT OF THE ENVIRONMENTAL
EXPENSE

Deferred grant income 125, 217, 391

grant income 125, 217, 391
TO RECORD THE GRANT INCOME

2019
Environmental expense 80, 000, 000
cash 80, 000, 000
TO RECORD THE PAYMENT OF THE ENVIRONMENTAL
EXPENSE

Deferred grant income 111, 304, 347

grant income 111, 304, 347
TO RECORD THE GRANT INCOME

2020
Environmental expense 60, 000, 000
Cash 60, 000, 0000
TO RECORD THE PAYMENT OF THE ENVIRONMENTAL
EXPENSE
Deferred grant income 83, 478, 260
grant income
TO RECORD THE GRANT INCOME

EXERCISE 8

CASE 1:

EQUIPMENT 7, 100, 000

ACCUMULATED DEP. 7, 100, 000

CASH 3, 600, 000

DEFERRED GRANT INCOME 3, 600, 000

DEPRECIATION 887, 500

ACCUMULATED DEP 887, 500

DEFERRED GRANT INCOME 450, 000

GRANT INCOME 450, 000
TO RECORD THE GRANT INCOME

SOLUTION:

ANNUAL DEP 7, 100, 000/8 = 887, 500

ANNUAL INCOME 3, 600, 00/8 = 450, 000

CASE 2

COST OF EQUIPMENT 7, 100, 000

LESS; GOVERNMENT GRANT 3, 600, 000
NET COST OF THE MACINE 3, 500, 000
DIVIDED BY USEFUL LIFE 8
ANNUAL DEP. 450, 000

EQUIPMENT 7, 100, 000

CASH 7, 100, 000
TO RECORD THE PURCHASE OF EQUIP.
CASH 3, 600, 000
EQUIPMENT 3, 600, 000
TO RECOPRD THE RECEIPT OF GRANT FROM THE GOEVERN. AS ADJUSTMENT TO THE ASSET

DEP. EXEPENSE 437, 500

ACCUMULATED DEP. 437, 500
TO RECORD THE DEP FOR 2020

EXERCUSE 9:

EXERCISE 10:

DISPOSABL PROCEEDS 55, 900

CARRYING/BOOK VALUE 23, 000
GAIN ON ASSET 32, 900