Land Building

Cash Paid 100,000 Razing 4,000

FV of Shares 170,000 Building Permit 1,500
Title Insurance 2,000 Const Cost 300,000
Special Asses 4,500 Overhead 10,000
Land 276,500 Building 315,500

Weighted Average Interest

Specific Borrowing Annual Interest
480,000 660,000/6,000,000=11%
180,000
660,000 WA Cost 5,600,000
Less:
Total General Borrowings
Specific Borrowing (3,600,000)
4,000,000
WA Cost for GB 2,000,000
2,000,000
Times 11%
3. How much is the Interest Expense to be reported 6,000,000
General Borrowing Int 220,000
Add:
Cost of Building 8,400,000 Specific Borrowing Int 360,000
Add: Avoidable Int 580,000
Borrowing Cost 580,000 vs Which ever is Lower
Value of Building 8,980,000 Actual 1,020,000

Actual 1,020,000
Avoidable (580,000)
Interest Exp 440,000

June 1 SV = 18,000
2002=2019
3,600,000 x 7/12=2,100,000 Interest Expense = 0 Cost of New PPE ACquired W/o Commercial
August 31 Substance
5,400,000 x 4/12=1,800,000 Cost of Building 13,500,000
Weighted Ave Cost 3,900,000 Add: CV of Asset Given
Specific Borrowing (2,450,000) Actual Interest 181,125 + Cash Paid/ - Cash Received
2020
WA Cost for GB 1,450,000 Cost of Building 13,681,125 Cash Price of New Asset
x 12%
96,000-18000=78,000/10=Annual Dep 7,800 x 3= Dep Ex before the Year of Sale 23,400
GB interest 174,000
Dep Ex Year of Sale 7,800 x 3/12 =1,950
SB Interest 128,625
Avoidable Interest 302,625
Cost 96,000 Alternative to Get Accum Dep
255,000-15,000=240,000 x 2.75/10=66,000 ACcumulated Dep 25,350
vs
CV 70,650 Depreciable Amount 78,000 x 3.25/10=25,350
2450,000 x 9% x 7/12=128,625 240,000 /10 = 24,000 x 2 =48,000 Less:
Actual
750,000 @12% = General Borrowing @12% 24,000 x 9/12= 18,000 Cash Received (12,000)
750,000 x 12% x 7/12=52,500
Total Accum Dep 66,000 Cash Price of New 58,650
Specific Borrowing 128,625
Actual Interest 181,125
255,000
Less:
(66,000)
CV 189,000
Less:
Cash Received 18,000
Cash Price of New 171,000

What if with Commercial Substance

FV of Asset Recevied 162,000 FV of Asset Received 162,000

Less: Less:
Cash Received (18,000) CV of Asset Given (189,000)
Cash Price of new 144,000 Loss 27,000

Land Building
Seiler Co. purchased land as a factory site for P600,000. Seiler paid P60,000 to 600,000 60,000
tear down two buildings on the land. Salvage was sold for P5,400. Legal fees of 3480 31,200
P3,480 were paid for title investigation and making the purchase. Architect's 2400 2,600
fees were P31,200. Title insurance cost 6,400 10,440
P2,400, and liability insurance during construction cost P2,600. Excavation cost 612,280 2,200,000
P10,440. The contractor was paid P2,200,000. An assessment made by the city 2,304,240
for pavement was P6,400. Interest costs during construction were P170,000.

The cost of the land that should be recorded by Seiler Co. is

The cost of the building that should be recorded by Seiler Co. is a.

On February 1, 2022, Morgan Corporation purchased a parcel of land as a factory site for Land
P200,000. An old building on the property was demolished, and construction began on a new building 200,000
which was completed on November 1, 2022. Costs incurred during this period are listed below: 5000
Demolition of old building P 20,000 205,000
Architect's fees 35,000
Legal fees for title investigation and purchase contract 5,000 Building
Construction costs 1,090,000 20,000
(Salvaged materials resulting from demolition were sold for P10,000.) 35,000
Morgan should record the cost of the land and new building, respectively, as 1,090,000
1,145,000

Tyson Chandler Company purchased equipment for P10,000. Sales tax on the Purchase Price 10,000
purchase was P500. Other costs incurred were freight charges of P200, repairs Freight 200
of P350 for damage during installation, and installation costs of P225. What is Installation 225
the cost of the equipment? Equipment 10,425

Carpenter Company purchased equipment for P12,000. Sales tax on the purchase
was
P600. Other costs incurred were freight charges of P240, repairs of P420 for
damage during installation, and installation costs of P270. What is the cost of
the equipment?

During self-construction of an asset by Jannero Pargo Company, the following

were among the costs incurred:

Fixed overhead for the year P1,000,000

Portion of P1,000,000 fixed overhead that would
be allocated to asset if it were normal production 40,000
Variable overhead attributable to self-construction 35,000

What amount of overhead should be included in the cost of the self-

constructed asset? 1,035,000

1,055,000

10,000,000 + 300,000=10,300,000 /40 =257,500

1,000,000 x 6/12=500,000
2,100,000 x 4/12=700,000
2,000,000 x 0/12=0
AVerage Cost = 1,200,000

Natural Resource
Depletion:
50,000,000-1,550,000= Depletable Amount
Wasting Asset = DEAR
48,450,000/150,000=Depletion Per unit 323 x 7,500 = 2,422,500 Yr 1 Depletion Exp
D= Development Cost
Depreciation
E= Exploration Cost
12,000,000/150,000 = Dep Ex per unit 80 x 7500= 600,000
A= Acquisition Cost
3,600,000/150,000=Dep Ex per unit 24 x 7500= 180,000
R=Reconditioning Cost
Dep Ex 780,000
Wasting Asset
Year 2
48,450,000/150,000= Depletion Per unit 323 x 15,000 =4,845,000

Dep Ex
12,000,000/150,000=Dep Ex Per unit 80 x 15,000=1,200,000
3,600,000/150,000=Dep Ex per unit 24 x 15,000 =360,000
Immovable Dep Ex 1,560,000
If the life of the equipment is shorter than the mining
period use straight line if not Output method

If movable = Staight Line

Note: if shut down Depreciate using straight Line

Replacement Cost Cost

2,200,000 FV
Less: Less:
2,000,000 CV
AD AD
200,000 Revaluation Surplus
Fair Value/Soud Value CV

200,000 /5= 40,000 Piece Meal Depreciation

200,000-40,000= 160,000 Rev Surp 2024

4) How much is the 2025 depreciation

10,400,000 -800,000 =9,600,00/10 x 4 yrs =3,840,000 Accumlated Dep 16,000,000-400,000=15,600,000/10 x 4 yrs =6,240,000
16,000,000
Cost 10,400,00
Less:
Less:
Accum Dep (6,240,000)
Accum Dep 3,840,000
SV/FV 9,760,000
CV 6,560,000

Revaluation Surplus 3,200,000

SV/FV 9,760,000
Less:
Salvage Value (400,00)
Depreciable Amount 9,360,000/8=1,170,000

Land 60m-70m= 10m Rev Surp Building 60m-18m=42m

42m-70m=28m Rev Surp

5,000,000

Total Rev Surplus 38,000,000 x 70%=26,600,000

Rev Surp for Building 28,000,000 x 70% =19,600,000/14=1,400,000

18,200,000 Rev of Building

7,000,000 Rev Surp Land
25,200,000

450,000 x 6/10= CV 270,000 FV Less CTS = 285,000 vs Value in Use 260,000

FV Less CTS = 195,000 vs Value in Use 198,000
250,000 x 12/15=CV 200,000

Impairment 2,000

Machine 1 270,000
Machine 2 198,000
Total 468,000