Income information for 2020 taken from the separate company financial sta Ezekiel Corporation and its 75% owned subsidiary, Lamentation Corporation is presented as follows: Ezekiel P1,000,000 P460,000 20,000 75,000 (500,000) (260,000) (100,000) (200,000) P295,000 P1O0,000 Lamentation Sales Gain on sale of building Dividend income Cost of goods sold Depreciation expense Other expenses Net income (60,000) (40,000) Ezekiel gain on sale of building relates to a building with a book value of P40,000 and a 10-year remaining useful life that was sold to Lamentation for P60,000 on January 4, 2020.
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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.
The Consolidated
a 180,000
b. 160,000
c. 162,000
d. 158,000
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- Kamulinda Company Limited (KCL) has provided the following financial information that relates to the year ended 31 December 2020: Statement of profit or loss Sales revenue Cost of sales Gross profit Administrative costs Distribution costs Operating profit Interest received Interest paid Profit before tax Taxation Profit after tax Shs '000' Assets: Non-current assets Accumulated depreciation Netbook value Investments Current assets: Inventory 250,400 (87,900) 162,500 (35,000) (50,000) 77,500 45,000 Shs '000' (25,000) 97,500 (20,000) 77,500 Statement of position as at 31 December: 2020 2019 Shs '000' Shs '000' 459,000 246,000 (125,000) (89,000) 334,000 157,000 76,000 156,000 100,000 Find current assets continued- Accounts receivable Cash at hand Cash at bank Total assets Equity and liabilities: Share capital Share premium Retained earnings Revaluation Non-current liabilities: Long term loan Current liabilities: Accounts payable Interest payable Tax Bank overdraft 24,450 65,000 655,450…Below are the Statements of Comprehensive Income of Riego and Mercadejas Companies for 2020. Riego Company's Statement of Comprehensive Income was prepared before it reported its share of Mercadejas Company's income. Riego Company uses the equity method. Mercadejas Co. Riego Co. 800,000 320,000 480,000 380,000 100,000 Sales Cost of sales Gross profit Operating Expenses Net Income Inventories, 1/1/20: Purchased from outsiders Purchased intercompany Inventories, 12/31/20: Purchased from outsiders Purchased intercompany 200,000 90,000 110,000 60,000 50,000 15,000 20,000 10,000 25,000 5,000 5,000 The gross profit rate, as a percentage of sales, has been stable for several years and 60% of Mercadejas Company's sales are to Riego Company. 75% of Mercadejas Company's was acquired by Riego Company some time ago at book value. Mercadejas Company's equity at December 31, 2020 consisted of P20,000 of capital stock and P60,000 of retained earnings. REQUIRED: Compute the amount of the following in…The following information appeared in the annual financial statements of Hitashi Projects Limited:Statement of Comprehensive Income for the year ended 31 December 2019 R Revenue 1 250 000Direct costs (786 000) Gross profit 464 000 Operating expenses (124 000) Operating profit 340 000 Interest expense (15 000) Profit before tax 325 000 Income tax (97 500) Profit after tax 227 500 Statement of Financial Position as at 31 December 2019Assets R Non-current assets 314 000 Current assets 386 000 Total assets 700 000 Equity and liabilities Shareholders’ equity 350 000 Non-current liabilities 205 000 Current liabilities 145 000 Total equity and liabilities 700 000 Note • Current assets (R386 000) include accounts receivable of R160 000, inventories of R80 000 and cash of R146 000. • Inventories as at 31 December 2018 amounted to R130 000. • Current liabilities comprise accounts payable only. • All direct costs and revenues are on credit.Required: Calculate the following ratios using the…
- Dela Rosa Company Company The income statement for the year ended December 31, 2020, for Dela Rosa Company Comnany contains the following condensed information. Dela Rosa Company Company Income Statement For the Year Ended December 31, 2X20 Sales revenue Cost of goods sold Operating expenses (excluding depreciation) Depreciation expense Loss on disposal of plant assets Income before income taxes Income tax expense Net income P6,583,000 P2,810,000 2,086,000 880,000 24.000 5,800.000 783,000 353,000 P430,000 The P24,000 loss resulted from selling equipment for P270,000 cash. The equipment was purchased at a cost of P750,000. The following balances are reported on Dela Rosa's comparative balance sheets at December 31, Dela Rosa Company Company Comparative Balance Sheets Cash Accounts receivable Inventory Accounts payable 2X20 P672,000 775,000 834,000 521,000 2X19 P130,000 610,000 867,000 501,000 Income tax expense of P353,000 represents the amount paid in 2020. Dividends declared and paid…The following information appeared in the annual financial statements of Havard Projects Limited: Statement of Comprehensive Income for the year ended 31 December 2019 R Revenue 1 250 000 Direct costs (786 000) Gross profit 464 000 Operating expenses (124 000) Operating profit 340 000 Interest expense (15 000) Profit before tax 325 000 Income tax (97 500) Profit after tax 227 500 Statement of Financial Position as at 31 December 2019 Assets R Non-current assets 314 000 Current assets 386 000 Total assets 700 000 Equity and liabilities Shareholders’ equity 350 000 Non-current liabilities 205 000 Current liabilities 145 000 Total equity and liabilities 700 000 Note Current assets (R386 000) include accounts receivable of R160 000, inventories of R80 000 and cash of R146 000. Inventories as at 31 December 2018 amounted to R130 000. Current liabilities comprise…The following information appeared in the annual financial statements of Hitashi Projects Limited: Statement of Comprehensive Income for the year ended 31 December 2019 R Revenue 1 250 000 Direct costs (786 000) Gross profit 464 000 Operating expenses (124 000) Operating profit 340 000 Interest expense (15 000) Profit before tax 325 000 Income tax (97 500) Profit after tax 227 500 Statement of Financial Position as at 31 December 2019 Assets R Non-current assets 314 000 Current assets 386 000 Total assets 700 000 Equity and liabilities Shareholders’ equity 350 000 Non-current liabilities 205 000 Current liabilities 145 000 Total equity and liabilities 700 000 Note Current assets (R386 000) include accounts receivable of R160 000, inventories of R80 000 and cash of R146 Inventories as at 31 December 2018 amounted to R130 Current liabilities…
- The information provided below was extracted from the accounting records of Harmony Limited on 31 December 2020: Harmony Limited Extract of Statement of Comprehensive Income for the year ended 31 December 2020 R Sales 6 600 000 Cost of sales (3 900 000) Gross profit 2 700 000 Operating expenses (1 710 000) Selling and administrative expenses 1 260 000 Depreciation 450 000 Operating profit 990 000 Interest expense (270 000) Profit before tax 720 000 Company tax (240 000) Profit after tax 480 000 Extract of Statement of Changes in Equity for the year ended 31 December 2020 Retained earnings R Balance on 01 January 2020 1 500 000 Profit after tax 480 000 Dividends paid and proposed in 2020 (180 000) Balance on 31 December 2020 1 800 000 Balances extracted from the Statement of Financial Position as at 31 December: 2020 2019 R R Plant and equipment 3 750 000 3 000 000 Investments 210 000 240 000 Inventories 1 290 000 1 230 000 Accounts receivable 1 140 000 1 050 000 Cash and cash…Presented below are the condensed income statement of Vital Corporation for the years ended December 31, 2020 and 2019: 2020 2019 5,000,000 3,350,000 1,650,000 675,000 975,000 200,000 1,175,000 411,250 763.750 Sales Cost of goods sold Gross income 4,900,000 3,300,000 1,600,000 650,000 950,000 Operating expenses Operating income Gain on sale of division Net income before income tax 950,000 332,500 617,500 Income tax expense (35%) Net income On October 10, 2020, Chalangs entered into an agreement to sell the assets of one of its geographical segments. The geographical segment comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the company. The segment was sold on December 31, 2020, for P1,750,000. The book value of the segment's assets was P1,550,000. The segment's contribution to Chalangs' operating income before tax for each year was as follows: 2020 113,750 loss 81,250 income 2019 Assume that by…Lancer Company's preliminary income statement for 2021 and its reported income statement for 2020 are given below. 2021 2020 1,350,000 (648,0001 702,000 (172,500) (162.000 367.500 Sales Revenues 1,320,000 (630.000 690,000 Cost of Goods Sold Gross Profit Depreciation Other Expenses (172,500) (153.000 364.500 Net Income Lancer's records reveal the following information: (1) Lancer neglected to record S8,000 of supplies expense at the end of 2020, so the supplies inventory was overstated at the end of 2020. Consequently, the supplies expense computed for 2021 included the additional amount of supplies used in 2020. (2) On 1/1/19, Lancer purchased a machine for $120,000. Although the machine was expected to have an eight-year life, it was erroneously expensed in recording the purchase. The appropriate depreciation method for this machine is double-declining-balance with no residual. (3) At the end of 2021, Lancer decided to change its inventory costing method from the FIFO costing method…
- The following information appeared in the annual financial statements of Hitashi Projects Limited:Statement of Comprehensive Income for the year ended 31 December 2019RRevenue 1 250 000Direct costs (786 000)Gross profit 464 000Operating expenses (124 000)Operating profit 340 000Interest expense (15 000)Profit before tax 325 000Income tax (97 500)Profit after tax 227 500Statement of Financial Position as at 31 December 2019Assets RNon-current assets 314 000Current assets 386 000Total assets 700 000Equity and liabilitiesShareholders’ equity 350 000Non-current liabilities 205 000Current liabilities 145 000Total equity and liabilities 700 000Note• Current assets (R386 000) include accounts receivable of R160 000, inventories of R80000 and cash of R146 000.• Inventories as at 31 December 2018 amounted to R130 000.• Current liabilities comprise accounts payable only.• All direct costs and revenues are on credit.Required:Calculate the following ratios using the information provided above.…The following financial statements relate to Inna Projects Limited:Statement of Comprehensive Income for the year ended 30 June 2018R’000Sales (Credit)8 000Cost of sales2 000Gross profit6 000Operating expenses2 800Operating profit3 200Interest expense220Profit before tax2 980Tax (25%)745Profit after tax2 235Statement of Financial Position as at 30 June 2018ASSETSR’000R’000Non-current assets45 320Current assets13 980Inventory5 080Debtors7 600Bank1 30059 300EQUITY AND LIABILITIESOwners’ equity54 040Capital39 000Retained income15 040Non-current assets3 000Current liabilities2 260Creditors2 26059 300Note: Inventory on 1 July 2017 amounted R3 000 000.Required:Calculate the following ratios and where applicable round off answers correctly to two decimal places:2.1 Gross margin (5)2.2 Inventory turnover (5)2.3 Debtors collection period (5)2.4 Return on own capital (5)2.5 Acid test ratio (5The financial statements for Wiley Ltd are presented below: Statement of profit or loss and other comprehensive income for Wiley Ltd for the year ending 30 June 2019 $ $ Sales (credit) 250 000 Cost of sales – Inventory—01 July 2018 (25 000) – Purchases (152 500) – Inventory—30 June 2019 27 500 (150 000) Gross profit 100 000 Selling and administrative expenses (20 000) Depreciation (40 000) Profit before tax 40 000 Income tax expense (20 per cent) (10 000) Profit after tax 30 000 Other comprehensive income – Total comprehensive income 30 000 Statement of financial position for Wiley Ltd as of 30 June 2019 ($) Cash 34000 Accounts receivable 46000 Inventory (cost) 27500 Plant and equipment 125000 less Accumulated depreciation (30000) Land 50000 Total assets 252500 Share capital 150000…