Deferred Income Approach

Jan. 1, 2023 Machinery 5,000,000

Cash 5,000,000

Cash 3,000,000
Deferred Income - Government Grant 3,000,000

Dec. 31, 2023 Depreciation Expense 562,500

Accumulated Depreciation-Machinery 562,500
[(P5M x .90) / 8]

Deferred Income - Government Grant 375,000

Income from Government Grant 375,000
(P2M / 8)

Deduction from Asset Approach

Jan. 1, 2023 Machinery 5,000,000
Cash 5,000,000

Cash 3,000,000
Machinery 3,000,000

Dec. 31, 2023 Depreciation Expense 200,000

Accumulated Depreciation-Machinery 200,000

Acqusition cost 5,000,000

Government grant -3,000,000
Net cost 2,000,000
Residual value -400,000
Depreciable cost 1,600,000
Useful life 8
Annual depreciation 200,000
1 Carrying value, Dec. 31, 2022 23,422,500
150% rate 6%
2023 depreciation - building 1,405,350

2 Machinery and equipment, Jan. 1, 2023 22,500,000

Machine stolen -575,000
Balance 21,925,000
Depreciation rate 0.10 2,192,500
Depreciation of stolen machine:
Cost 575,000
Depreciation rate 0.10
Annual depreciation 57,500
Number of months 3 14,375
Depreciation of July 1 machine:
Invoice cost 7,000,000
Freight 125,000
Installation 625,000
Total initial cost 7,750,000
Depreciation rate 0.10
Annual depreciation 775000
Number of months 6 387,500
2023 depreciation - machinery & equipment 2,594,375

3 Depreciation balance 900,000

Depreciation on truck traded in (2/10) -180,000 720,000
Depreciation on new truck (4/10) 480,000
2023 depreciation - delivery equipment 1,200,000

4 Cost of leasehold improvements 6,000,000

Depreciation period, in months 80
Monthly depreciation 75,000
Number of months 8
2023 depreciation - leasehold improvements 600,000

5 Balance, January 1 6,577,500

2023 depreciation 1,405,350
AD - Buildings, December 31, 2023 7,982,850

6 Balance, January 1 6,250,000

2023 depreciation 2,594,375
AD balance of stolen machine:
Cost 575,000
Useful life 10
Annual depreciation 57,500
Age 5 -287,500
AD - Machinery & Equipment, Dec. 31, 2023 8,556,875

7 Cost of delivery equipment 5,750,000

AD - Delivery Equipment, Dec. 31, 2023
 Balance, January 1 4,230,000
2023 depreciation 1,200,000
AD bal of truck traded in: (900,000 - 270,000) -630,000 4,800,000
Carrying value, delivery equipment, Dec. 31, 2023 950,000

8 Book value - traded in truck 270,000

Trade in value:
Cash price 1,200,000
Cash payment -1,000,000 200,000
Loss on trade 70,000
No. 1 to 3 Cost 6,000,000
Residual value (600,000)
Depreciable cost 5,400,000
Sum-of-years' digits Double declining balance
Straight line Depreciable cost Ratio Depreciation Depreciation Book value
6,000,000
2023 1,080,000 5,400,000 5/15 syd 1,800,000 2,400,000 3,600,000
2024 1,080,000 5,400,000 4/15 syd 1,440,000 1,440,000 2,160,000
2025 1,080,000 5,400,000 3/15 syd 1,080,000 864,000 1,296,000
2026 1,080,000 5,400,000 2/15 syd 720,000 518,400 777,600
2027 1,080,000 5,400,000 1/15 syd 360,000 177,600 600,000
5,400,000 5,400,000 5,400,000
No. 4
Remaining life, Jan. 1, 2024 4
Straight line rate 1/4
Double declining rate 1/2

Book value, Jan. 1, 2024 4,920,000 50%

2024 2,460,000 2,460,000
2025 1,230,000 1,230,000
2026 615,000 615,000
2027 15,000 600,000
 Units Hours
Depreciable cost 5,000,000 5,000,000
Total base 500,000 40,000
Depreciation per unit/hour 10 125

Units Hours
Depreciation for the year: Produced Used
2022 320,000 312,500 2022 32,000 2,500
2023 400,000 406,250 2023 40,000 3,250
2024 450,000 525,000 2024 45,000 4,200
2025 600,000 562,500 2025 60,000 4,500
Book value, Jan. 1, 2026 3,230,000 3,193,750

1.a. 2023 depreciation expense

P10 x 40,000 units 400,000

1.b. Cost 5,000,000

Acc. Depreciation, Dec. 31, 2024
P10 x (32,000 + 40,000 + 45,000) (1,170,000)
Carrying value, Dec. 31, 2024 3,830,000

1.c. Selling price 3,250,000

Carrying value, Jan. 1, 2026 (3,230,000)
Gain on sale 20,000

2.a. 2023 depreciation expense

P150 x 3,250 hours 487,500

2.b. Cost 5,000,000

Acc. Depreciation, Dec. 31, 2024
P125x (2,500 + 3,250 + 4,200) (1,243,750)
Carrying value, Dec. 31, 2024 3,756,250

2.c. Selling price 3,250,000

Carrying value, Jan. 1, 2026 (3,193,750)
Gain on sale 56,250
1 Machine A 600,000
Machine B 600,000
Total depreciation, 2022 1,200,000

2 Cost Replacement Increase

Machine A 3,000,000 3,150,000 150,000
Acc. Depreciation (600,000) (630,000) (30,000)
Balance 2,400,000 2,520,000 120,000

Revaluation surplus, Dec. 31, 2022 120,000

*Revaluation decrease on Machine B is reported in profit or loss statement.

3 Proceeds 870,000
Carrying value, July 1:
Carrying value, Jan. 1, 2023 1,140,000
Depreciation to July 1, 2023 (285,000) 855,000
Gain on sale 15,000

4 Machine A:
Carrying value, Dec. 31, 2023 (2,520,000 x 3/4) 1,890,000
Fair value, Dec. 31, 2023 1,680,000
Revaluation decrease 210,000
Revaluation surplus:
Balance 120,000.00
Piecemeal realization (30,000.00) (90,000)
Revaluation loss in P/L 120,000
Machine C:
Carrying value (2,840,000 - 355,000) 2,485,000
Fair value 2,055,000 430,000
Total revaluation loss 550,000

5 Machine A: (2,520,000 / 4) 630,000

Machine B: (1,140,000 / 2 x 1/2) 285,000
Machine C: (2,840,000 / 4 x 1/2) 355,000
Total depreciation - 2023 640,000
1 Cost Replacement Increase
Machinery 2,500,000 3,750,000 1,250,000
Residual value (375,000) (375,000) -
Balance 2,125,000 3,375,000 1,250,000
Accumulated depreciation (1,000,000) (1,500,000) (500,000)
Balance 1,125,000 1,875,000 750,000

2 Remaining depreciable cost 1,875,000

Residual value 375,000
Carrying amount 2,250,000
Depreciation rate 25%
Depreciation 562,500

3 Revaluation surplus 750,000

Depreciation rate 25%
Piecemeal realization 187,500
1 Carrying value, Dec. 31, 2023 1,600,000
Recoverable amount, Dec. 31, 2023 (1,280,000)
Impairment 320,000

Recoverable amount, Dec. 31, 2024 1,480,000

Carrying value, Dec. 31, 2024, no impairment: (2M x 7/10) 1,400,000 1,400,000

Recoverable amount, Dec. 31, 2023 1,280,000

Depreciation, 2024 (160,000)
Carrying value of impaired asset, Dec. 31, 2024 1,120,000
Gain on recovery of impairment 280,000 P/L
Revaluation surplus - Equity

2 Recoverable amount, Dec. 31, 2024 1,480,000

Carrying value of impaired asset, Dec. 31, 2024 1,120,000
Total increase in carrying amount 360,000
Gain on recovery of impairment 320,000 P/L
Revaluation surplus 40,000 Equity
1 Cost 450,000
Accumulated depreciation, Dec. 31, 2023 (90,000)
Carrying value, Dec. 31, 2023 360,000
Recoverable amount, Dec. 31, 2023 288,000
Impairment 72,000

2 Carrying value, Jan. 1, 2024 288,000

Depreciation - 2024 (36,000)
Carrying value, Dec. 31, 2024 252,000

3 Cost 450,000
Ratio of remaining life 7/10
Carrying value, no impairment 315,000

4 Recoverable amount 333,000

Carrying value, no impairment 315,000 a use lower amount

Carrying value, no impairment 315,000

Carrying value of impaired asset (252,000)
Gain on recovery of impairment 63,000