AP-5903_PPE & Intangibles

AP-5903_PPE & Intangibles - PROBLEM NO. 1 - White...

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Nondepreciable: Land, 1/1/05 2,500,000 Cash paid on purchase of land 10,000,000 Mortgage assumed on the land bought, including interest at 16% 16,000,000 Realtor’s commission 1,200,000 Legal fees, realty taxes and documentation expenses 200,000 Amount paid to relocate persons squatting on the property 400,000 Cost of tearing down an old building on the land 300,000 Amount recovered from the salvage of the building demolished (600,000) Land, 12/31/05 30,000,000 1 Depreciable: Land improvements Balance, 1/1/05 560,000 Cost of fencing the property 440,000 1,000,000 2 Building Balance, 1/1/05 3,600,000 Amount paid to a contractor for the building erected 8,000,000 Building permit fees 50,000 Excavation expenses 250,000 Architect’s fee 100,000 12,000,000 3 Machinery and equipment Balance, 1/1/05 6,600,000 Invoice cost of machinery acquired 8,000,000 Freight, unloading, and delivery charges 240,000 Customs duties and other charges 560,000 1,600,000 17,000,000 4 Total depreciable PPE, 12/31/05 30,000,000 5 PROBLEM NO. 1 - White Corporation Allowances, hotel accommodations, etc., paid to foreign technicians during instillation and test run of machines
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Entry made Should be entry Adjusting journal entry a. Office equipment 400,000 Office equipment 392,000 Purchase disc. lost 8,000 Cash 400,000 Purchase disc. lost 8,000 * Office equipment 8,000 Cash 400,000 *(P400,000 x 2%) b. Machinery 140,000 Machinery 128,000 FC/Interest exp 12,000 Cash 140,000 FC/Interest exp 12,000 Machinery 12,000 (entry made reconstructed from the Cash 140,000 depreciation information; P28,000 x 5) Freight in 4,000 Machinery 4,000 Machinery 4,000 Cash 4,000 Cash 4,000 Freight in 4,000 Depreciation exp 28,000 Depreciation exp 26,400 Acc. Dep. 1,600 Acc. Dep. 28,000 Acc. Dep. 26,400 Depreciation exp 1,600 (140,000/5 ) [(128,000+4,000)/5] c. Machinery 400,000 Machinery 360,000 Discount on BP 40,000 Bonds payable 400,000 Discount on BP 40,000 Machinery 40,000 Bonds payable 400,000 Depreciation exp 54,000 Depreciation exp 48,000 Acc. Dep. 6,000 Acc. Dep. 54,000 Acc. Dep. 48,000 Depreciation exp 6,000 [(400,000-40,000)/5 *9/12] [(36,000-4,000)/5 *9/12] Interest exp 3,000 Interest exp 3,000 Discount on BP 3,000 Discount on BP 3,000 [(40,000/10)*9/12] d. Machinery 140,000 Machinery 110,000 Allowance for DA 28,000 Accts receivable 140,000 Allowance for DA 28,000 Loss on exchange 2,000 Loss on exchange 2,000 Machinery 30,000 Accts receivable 140,000 Treasury stock 140,000 Treasury stock 110,000 Machinery 30,000 Machinery 140,000 Machinery 110,000 Treasury stock 30,000 e. Equipment 450,000 Equipment 500,000 Equipment 50,000 Investment in Tyler 450,000 Investment in Tyler 450,000 Gain on exchange 50,000 Gain on exchange 50,000 f. Machinery 20,000 Machinery-new 140,000 Machinery-new 120,000 Cash 20,000 Accumulated dep. 280,000
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AP-5903_PPE & Intangibles - PROBLEM NO. 1 - White...

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