The Company's fixed assets as of December 31, 2020 were presented as follows: Class Building Machineries IT Equipment Furniture & Fixtures Tools & Spare parts Title TCT167899 TCT40837 Cost TCT94412 12,000,000 9,000,000 8,000,000 1,102,500 800,000 The Company also held the following as Investment Property as of December 31, 2021. The Company uses cost model in reporting property, plant and equipment and investment properties. Location Davao City Carcar City, Cebu Carmona, Cavite Acc. Dep'n Useful life 2,502,563 20 years 4,418,182 10 years 2,400,000 8 years 128,625 5 years Cost Depreciation method 150% declining method Sum-of-years digit Straight line Straight line Inventory method Remarks Received from shareholder as contribution, leased out to Borcelis Research Institute. P7,500,000 3,200,000 11,050,000 going Idle; to be used as research facility in 2023 Idle; construction of research facility on- Audit notes: A. At the beginning of 2021, a three-year old IT equipment which had an original cost of P3.2 million was traded in for a more advanced, high-power mainframe which had a cash purchase price of P8.5 million. The Company paid P6.0 million cash in the exchange. B. A new machinery was acquired on June 1, 2021 in exchange for 40,000, P100 par value ordinary shares of the Company. The machinery had no establish cash price while the shares, which are actively traded in the exchange market, were selling at P125. The Company incurred freight and installation costs totaling P100,000. During installation, additional labor and materials totaling P25,000 were incurred because of mishandling of the equipment. Prior to use, the machinery was tested incurring testing cost of P50,000. Products from the testing done were eventually sold for a total of P20,000. C. Additional tools and spare parts were acquired during the year totaling P600,000. An inventory count of tools and spare parts at year end revealed that there were P700,000 worth of tools left on hand. During the year, the Company disposed retired tools for a total cash proceeds of P50,000, at book value. D. In your review of minutes of BOD meetings, you noted that the Board resolved that the previously idle properties in Carcar and Carmona shall be the sites of the Company's research facilities.
The Company's fixed assets as of December 31, 2020 were presented as follows: Class Building Machineries IT Equipment Furniture & Fixtures Tools & Spare parts Title TCT167899 TCT40837 Cost TCT94412 12,000,000 9,000,000 8,000,000 1,102,500 800,000 The Company also held the following as Investment Property as of December 31, 2021. The Company uses cost model in reporting property, plant and equipment and investment properties. Location Davao City Carcar City, Cebu Carmona, Cavite Acc. Dep'n Useful life 2,502,563 20 years 4,418,182 10 years 2,400,000 8 years 128,625 5 years Cost Depreciation method 150% declining method Sum-of-years digit Straight line Straight line Inventory method Remarks Received from shareholder as contribution, leased out to Borcelis Research Institute. P7,500,000 3,200,000 11,050,000 going Idle; to be used as research facility in 2023 Idle; construction of research facility on- Audit notes: A. At the beginning of 2021, a three-year old IT equipment which had an original cost of P3.2 million was traded in for a more advanced, high-power mainframe which had a cash purchase price of P8.5 million. The Company paid P6.0 million cash in the exchange. B. A new machinery was acquired on June 1, 2021 in exchange for 40,000, P100 par value ordinary shares of the Company. The machinery had no establish cash price while the shares, which are actively traded in the exchange market, were selling at P125. The Company incurred freight and installation costs totaling P100,000. During installation, additional labor and materials totaling P25,000 were incurred because of mishandling of the equipment. Prior to use, the machinery was tested incurring testing cost of P50,000. Products from the testing done were eventually sold for a total of P20,000. C. Additional tools and spare parts were acquired during the year totaling P600,000. An inventory count of tools and spare parts at year end revealed that there were P700,000 worth of tools left on hand. During the year, the Company disposed retired tools for a total cash proceeds of P50,000, at book value. D. In your review of minutes of BOD meetings, you noted that the Board resolved that the previously idle properties in Carcar and Carmona shall be the sites of the Company's research facilities.
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter7: Operating Assets
Section: Chapter Questions
Problem 63E: Balance Sheet Presentation The following information relates to the assets of Westfield...
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