Problem – 33-6 (IFRS) Marian Company purchased a noncurrent asset with a useful life of 10 years on

January 1, 2010 for P6, 500,000. On December 31, 2010, the amount the entity would receive from the
disposal of the asset if it was already of the age and in the condition expected at the end of its useful life
was estimated at P700, 000. Inclusive of inflation, the actual amount expected to be received on
disposal was estimated at P900, 000. What should be the depreciation charge for the year ended
December 31, 2010? a. 580,000 b. 650,000 c. 560,000 d. 0 Solution 33-6 Answer a Acquisition cost
6,500,000 Residual value (700,000) Depreciable amount 5,800,000 Depreciation (5, 800,000 / 10)
580,000 Problem 33-7 (PHILCPA Adapted) Apex Company purchased a tooling machine in 2000 for P3,
000,000. The machine was depreciated on the straight line method over an estimated useful life of
twenty years with no residual value. At the beginning of 2010, when the machine had been in use for 10
years, the entity paid P600, 000 to overhaul the machine. As a result of this improvement, the entity
estimated that the useful life of the machine would extend an additional 5 years. What should be the
depreciation expense for the machine in 2010? a. 150,000 b. 140,000 c. 210,000 d. 340,000 Solution 33-
7 Answer b Original cost 3,000,000 Accumulated depreciation (3,000,000 /20 x 10) 1,500,000 Carrying
amount – January 1, 2010 1,500,000 Improvement 600,000 Adjusted carrying amount 2,100,000
Depreciation for 2010 (2, 100,000 / 15) 140,000 Problem 33-8 (PHILCPA Adapted) Carmet Company
provided the following information with respect to its building.  The building was acquired January 1,
2005 at a cost of P7, 800,000 with an estimated useful life of 40 years and residual value of P200, 000.
Yearly depreciation was computed on the straight line method.  The building was renovated on January
1, 2007 at a cost of P760, 000. This was considered as improvement. Residual value did not change.  On
January 1, 2010, the management decided to change the total life of the building to 30 years. What is
the depreciation of the building for 2010? a. 292,400 b. 266,000 c. 334,400 d. 294,000 Solution 33-8
Answer d Original cost – January 1, 2005 7, 800,000 Improvement – January 1, 2007 760,000 Total cost
8,560,000 Accumulated depreciation – December 31, 2009 7,800,000 – 200,000 / 40 x 5 950,000 760,
000 / 38 x 3 60,000 1,010,000 Carrying amount – January 1, 2010 7,550,000 Depreciation for 2010 (7,
550,000 – 200,000 / 25 ) 294,000 The revised total life is 30 year. 5 years already expired from January 1,
2005 to January 1, 2010. Thus, the remaining revised life is 25 years. Problem 33-9 (IFRS) Daisy Company
acquired a drilling machine on October 1, 2008 at a cost of P2, 500,000 and depreciated it at 25% per
annum on a straight line basis. On October 1, 2010, the entity spent P500, 000 on upgrade to the
machine in order to improve its efficiency and increase the inflow of economic benefits over the
machine’s remaining life. What depreciation expense should be recognized for the year ended
September 30, 2011? a. 1,125,000 b. 625,000 c. 850,000 d. 875,000 Solution 33-9 Answer d Original life
(100% / 25%) 4 years Years expired on October 1, 2010 2 Remaining life 2 Depreciation on original cost
(2,500,000 x 25%) 625, 000 Depreciation on improvement (500, 000/2) 250, 000 Total depreciation 875,
00