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CPA REVIEW SCHOOL OF THE PHILIPPINES
M a n i l a
AUDIT OF PROPERTY, PLANT AND EQUIPMENT – QUIZZERS
PROBLEM NO. 1
You were engaged in making your second annual examination of
Machinery and Accumulated Depreciation accounts are shown below:
Sale of machine
Machine No. 23
Machine No. 3
Your examination disclosed the following information:
a. The company has depreciated all items of equipment at 10% per annum.
item owned is seven years old as of December 31, 2005.
b. The following adjusted balances appeared on December 31, 2004 working papers:
Equipment – P500,000; Accumulated Depreciation – P 280,000.
Machine No. 3, which was purchased on March 1, 2001, at a cost of P80,000, was sold
on September 1, 2005 for P10,000 cash.
d. Included in charges to Repairs and Maintenance account was an invoice for installation
of Machine No. 23, in the amount of P35,000.
e. It is the company’s policy to take full year’s depreciation in the year of acquisition and
none in the year of disposition.
Based on the information presented above and the result of your audit, answer the
How much is the loss on the sale of Machine no. 3?
How much is the adjusted balance of the Machinery account as of December 31,
How much is the total depreciation expense on machinery for 2005?
How much is the balance of the Accumulated Depreciation account as of December