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- On January 1, 2014, Klinefelter Company purchased a building for 520,000. The building had an estimated life of 20 years and an estimated residual value of 20,000. The company has been depreciating the building using straight-line depreciation. At the beginning of 2020, the following independent situations occur: a. The company estimates that the building has a remaining life of 10 years (for a total of 16 years). b. The company changes to the sum-of-the-years-digits method. c. The company discovers that it had ignored the estimated residual value in the computation of the annual depreciation each year. Required: For each of the independent situations, prepare all journal entries related to the building for 2020. Ignore income taxes.Bliss Company owns an asset with an estimated life of 15 years and an estimated residual value of zero. Bliss uses the straight -line method of depreciation. At the beginning of the sixth year, the assets book value is 200,000 and Bliss changes the estimate of the assets life to 25 years, so that 20 years now remain in the assets life. Explain how this change will be accounted for in Blisss financial statements, and compute the current and future annual depreciation expense.The Siri Company acquired equipment on January 1, 2015 at a cost of P400,000, depreciating it over 8 years with a nil residual value. On January 1, 2018. The Triss Company acquired 100% of Siri and estimated the fair value of the equipment at P230,000 with a remaining life of 5 years. This fair value was not incorporated into Siri’s books and the depreciation expense continued to be calculated by reference to original cost. What adjustments should be made to the depreciation expense for the year and the statement of financial position carrying amount in preparing the consolidated financial statements for the year ended December 31, 2019? DEPRECIATION EXPENSE -decrease by P4,000 ; CARRYING AMOUNT - decreased by P12,000 DEPRECIATION EXPENSE -decreased by P4,000 ; CARRYING AMOUNT - increased by P12,000 DEPRECIATION EXPENSE -increase by P4,000 ; CARRYING AMOUNT - decreased by P12,000 DEPRECIATION EXPENSE…
- The Siri Company acquired equipment on January 1, 2015 at a cost of P400,000, depreciating it over 8 years with a nil residual value. On January 1, 2018. The Triss Company acquired 100% of Siri and estimated the fair value of the equipment at P230,000 with a remaining life of 5 years. This fair value was not incorporated into Siri’s books and the depreciation expense continued to be calculated by reference to original cost. What adjustments should be made to the depreciation expense for the year and the statement of financial position carrying amount in preparing the consolidated financial statements for the year ended December 31, 2019? a. DEPRECIATION EXPENSE -decrease by P4,000 ; CARRYING AMOUNT - decreased by P12,000 b. DEPRECIATION EXPENSE -increase by P4,000 ; CARRYING AMOUNT - decreased by P12,000 c. DEPRECIATION EXPENSE -decreased by P4,000 ; CARRYING AMOUNT - increased by P12,000 d. DEPRECIATION EXPENSE -increase by P4,000 ; CARRYING AMOUNT - increased by P12,000The R Company acquired an equipment on January 1, 2016 at a cost of P900,000, depreciating it over 8 years with a nil residual value. On January 1, 2019 the M Company acquired 100% of R and estimated the fair value of the equipment at P520,000, with a remaining life of 5 years. This fair value was not incorporated into R’s books and the depreciation expense continued to be calculated by reference to original cost. What adjustments should be made to the carrying amount of equipment in preparing the consolidated statements of financial position for the year ended December 31, 2020? Increase or decrease? *a. P42,500 increaseb. P17,000 decreasec. P25,500 decreased. P42,500 decreaseThe S & R Company acquired equipment on January 1, 2017 at a cost of P800,000, depreciating it over 8 years with a nil residual value. On January 1, 2020 the Minch Company acquired 100% of S & R and estimated the fair value of the equipment at P460,000 with a remaining life of 5 years. This fair value was incorporated into S & R's books and the depreciation expense continued to be calculated by refeference to original cost. Under PAS 27 Consolidated and separate financial statements, what adjustments should be made to the depreciation expense for the year and the statement of financial position carrying amount in preparing the consolidated financial statements for the year ended December 31, 2021? Depreciation Expense Carrying Amount a. Increase by P8,000 Increase by P24,000 b. Increase by P8,000 Decrease by P24,000 c. Decrease by P8,000…
- JPHEI Company purchased a machine on January 1, 2016 for P6,000,000. At the date of acquisition, the machine had a life of six years with no residual value. The machine was depreciated on a straight line basis. On January 1, 2019, 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 expense of the machine for 2019? A P750,000 B) P600,000 P1,000,000 D) P375,000On December 1, 2018, Joy Corporation decided to dispose of an item of plant that is carried in its records at a cost of P450,000, with accumulated depreciation of P80,000. Depreciation on the plant since it was originally acquired has been charged at P5,000 per month. The company undertook all the necessary actions to be able to classify the asset as held for sale. It is estimated that it could sell the plant for its fair value, P350,000, incurring P10,000 selling costs in the process. On December 31, 2018, the plant had not been sold but, due to a shortage of this type of plant, there had been an increase in the fair value to P360,000 while expected costs to sell remain at P10,000. Case 1: Any gain on the subsequent increase in the fair value less cost to sell of a noncurrent asset classified as held for sale should be treated as follows: a. The gain should be recognized in full. b. The gain should not be recognized. c. The gain should…On January 1, 2018, CRIMSON Company purchased machineries for P10,560,000 and depreciated it by the straight-line method using an estimated useful life of eight years with no salvage value. On January 1, 2021, CRIMSON determined that the machineries had a useful life of six years from the date of acquisition and will have a salvage value of P960,000. An accounting change was made in 2021 to reflect these additional data. How much should be the balance of the accumulated depreciation for these machineries on December 31, 2021? A. ₱ 6,160,000 B. ₱ 6,400,000 C. ₱ 7,040,000 D. ₱ 5,840,000
- REPTILE COMPANY acquired a machine on January 1, 2018 for P5,250,000. It was to be depreciated using the straight-line method and no residual value was expected at the end of its useful life of 15 years. The fair value which was likewise the asset’s net recoverable amount were as follows: January 1, 2020. P4,975,000; January 1, 2022, P3,872,000; January 1, 2025, P2,600,000 Prepare all the necessary journal entries from 2018 – 2025 Depreciation expense 2018 – 2025 Impairment reported as a loss included in P&L 2020 – 2025UNDOS COMPANY purchased equipment for P5,000,000 on January 1, 2013 with a useful life of ten years and no residual value. On January 1, 2015, the entity classified the asset as held for sale. The fair value of the equipment of January 1, 2015 is P3,300,000 and the cost of disposal is P100,000. On December 31, 2015, the fair value of the equipment is P3,800,000 and the cost of disposal is P200,000. On December 31, 2015, the entity believed that the criteria for classification as held for sale can no longer be met. Accordingly, the entity decided not to sell the asset but to continue to use it. What amount should be recognized in profit or loss as a result of the reclassification in 2015?UNO COMPANY purchased equipment for P5,000,000 on January 1, 2013 with a useful life of ten years and no residual value. On January 1, 2015, the entity classified the asset as held for sale. The fair value of the equipment of January 1, 2015 is P3,300,000 and the cost of disposal is P100,000. On December 31, 2015, the fair value of the equipment is P3,800,000 and the cost of disposal is P200,000. On December 31, 2015, the entity believed that the criteria for classification as held for sale can no longer be met. Accordingly, the entity decided not to sell the asset but to continue to use it. What is the measurement of the equipment that ceases as held for sale on December 31, 2015?