In the audit of Atlanta Corporation’s financial statements at December 31, 2025, the chief accountant of the staid corporation provided the following information: Notes payable: Arising from purchase of goods 304,000 Arising from 5 year-bank loans, on which marketable securities valued at P600,000 have been pledged as security, P400,000 due on June 30, 2026; P100,000 due on Dec. 31, 2026 500,000 Arising from advances by officers, due June 30, 2026 50,000 Reserve for general contingencies 400,000 Employees’ income tax withheld 20,000 Advances received from customers on purchase orders 64,000 Containers’ deposit 50,000 Accounts payable arising from purchase of goods, net of debit balances of P40,000 170,000 Cash dividends payable 80,000 Stock dividend payable 100,000 Dividends in arrears on preferred stock, not yet declared 200,000 Convertible bonds, due January 31, 2027 1,000,000 First mortgage serial bonds, payable in semi-annual installments of P50,000, due April 1 and October 1 2,000,000 Overdraft with Allied bank 90,000 Cash in bank balance with PNB 390,000 Estimated damages to be paid as a result of unsatisfactory performance on a contract 160,000 Estimated expenses on meeting guarantee for service requirements on merchandise sold 120,000 Estimated premiums payable 75,000 Deferred revenue 87,000 Accrued interest on bonds payable 360,000 Common stock warrants outstanding 120,000 Common stock options outstanding 210,000 Unused letters of credit 400,000 Deficiency VAT assessment being contested 500,000 Notes receivable discounted 200,000 On March 31, 2026, the P400,000 notes payable was replaced by an 18-month note for the same amount. Atlanta is considering similar action on the P100,000 note payable due on December 31, 2026. The 2025 financial statements were issued on March 31, 2026. On December 1, 2025, a former employee filed a lawsuit seeking P200,000 for unlawful dismissal. Atlanta’s attorney believe that the suit is without merit. No court date has been set. Questions: Based on the above and the result of your audit, compute the following as of December 31, 2025: Total current liabilities Total noncurrent liabilities Total liabilities
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
In the audit of Atlanta Corporation’s financial statements at December 31, 2025, the chief accountant of the staid corporation provided the following information:
|
Notes payable: |
|
|
Arising from purchase of goods |
304,000 |
|
Arising from 5 year-bank loans, on which marketable securities valued at P600,000 have been pledged as security, P400,000 due on June 30, 2026; P100,000 due on Dec. 31, 2026 |
500,000 |
|
Arising from advances by officers, due June 30, 2026 |
50,000 |
|
Reserve for general contingencies |
400,000 |
|
Employees’ income tax withheld |
20,000 |
|
Advances received from customers on purchase orders |
64,000 |
|
Containers’ deposit |
50,000 |
|
Accounts payable arising from purchase of goods, net of debit balances of P40,000 |
170,000 |
|
Cash dividends payable |
80,000 |
|
Stock dividend payable |
100,000 |
|
Dividends in arrears on |
200,000 |
|
Convertible bonds, due January 31, 2027 |
1,000,000 |
|
First mortgage serial bonds, payable in semi-annual installments of P50,000, due April 1 and October 1 |
2,000,000 |
|
Overdraft with Allied bank |
90,000 |
|
Cash in bank balance with PNB |
390,000 |
|
Estimated damages to be paid as a result of unsatisfactory performance on a contract |
160,000 |
|
Estimated expenses on meeting guarantee for service requirements on merchandise sold |
120,000 |
|
Estimated premiums payable |
75,000 |
|
Deferred revenue |
87,000 |
|
Accrued interest on bonds payable |
360,000 |
|
Common stock warrants outstanding |
120,000 |
|
Common stock options outstanding |
210,000 |
|
Unused letters of credit |
400,000 |
|
Deficiency VAT assessment being contested |
500,000 |
|
Notes receivable discounted |
200,000 |
On March 31, 2026, the P400,000 notes payable was replaced by an 18-month note for the same amount. Atlanta is considering similar action on the P100,000 note payable due on December 31, 2026. The 2025 financial statements were issued on March 31, 2026.
On December 1, 2025, a former employee filed a lawsuit seeking P200,000 for unlawful dismissal. Atlanta’s attorney believe that the suit is without merit. No court date has been set.
Questions: Based on the above and the result of your audit, compute the following as of December 31, 2025:
- Total current liabilities
- Total noncurrent liabilities
- Total liabilities
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