# The original life of the main machine is 10 years and

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The original life of the main machine is 10 years and 6 years already expired from April 1, 2013to April 1,2019.Problem 27-6 (AICPA Adapted)Frey Company purchased a machine for P4,500,000 on January 1, 2019. The machine has anestimated useful life of four years and a residual value of P500,000. The machine is beingdepreciated using the sum of the years' digits method.1. What is the accumulated depreciation on December 31, 2020?a. 1,600,000b. 2,800,000c. 1,200,000d. 3,150,0002. What is the carrying amount on December 31, 2020?a. 2,900,000b. 2,700,000c. 1,700,000
d. 1,350,000Solution 27-6Question I Answer bQuestion 2 Answer cSYD =1 +2+ 3+4=10Acquisition cost4,500,000Accumulated depreciation2019 (4/10 x 4,000,000)1,600,0002020 (3/10 x 4,000,000)1,200,0002,800,000Carrying amount - December 31, 20201,700,000Problem 27-7 (AICPA Adapted)On January 1, 2017, Mogul Company acquired equipment to be used in the manufacturingoperations.The equipment had an estimated useful life of 10 years and an estimated residual value ofP50,000.The depreciation applicable to this equipment was P240,000 for 2019 computed under the sumof years' digits method.What was the acquisition cost of the equipment?a. 1,650,000b. 1,700,000c. 2,400,000d. 2,450,000Solution 27-7 Answer bSYD =1+2+ 3+4+5+6+7+8+9+10 = 55The first three fractions are 10/55 for 2017, 9/55 for 2018, and 8/55 for 2019.Thus, the 2019 depreciation of P240,00 is equal to 8/55.Depreciation for 2019240,000Divide by equivalent fraction8/55Depreciable amount1,650,000Residual value50,000Acquisition1,700,000Problem 27-8 (AICPA Adapted)On April 1, 2019, Kew Company purchased new machinery for P3,300,000. The machinery hadan estimated useful life of five years with residual value of P300,000. Depreciation is computedby the sum of the years' digits method.1. What amount should be recorded as depreciation for 2019?a. 500,000b. 750,000c. 900,000d. 800,000
2. What amount should be recorded as depreciation for 2020?a. 1,600,000b. 1,800,000c.850,000d.600,000Solution 27-8Question I Answer bSYD 1+2 + 3+4 +5SYD = 15April 1, 2019 to March 31, 2020 (5/15 x 3,000,000)1,000,000April 1,2020 to March 31, 2021 (4/15 x 3,000,000)800,000Accumulated depreciation - March 31, 20211,800,000April 1, 2019 - December 31, 2019 (1,000,000 x 9/12)750,000Question 2 Answer cJanuary 1, 2020 - March 31, 2020 (1,000,000 x 3/12)250,000April 1, 2020- December 31, 2020 (800,000 x 9/12)600,000Total 2020 depreciation850,000Accumulated depreciation - December 31, 2020 (750,000 + 850,000)1,600,000Problem 27-9 (AICPA Adapted)Rago Company takes a full year depreciation expense in the year of acquisition and nodepreciation expense in the year of disposition.Data relating to a depreciable asset on January 1, 2019:Acquisition year2016Cost1,100,000Residual value200,000Accumulated depreciation720,000Estimated useful life5 yearsUsing the same depreciation method in 2016, 2017 and 2018, what 5 years amount ofdepreciation should be recorded in 2019?a. 120,000b. 180,000c. 220,000.d, 240,000Solution 27-9 Answer aThe accumulated depreciation on January 1, 2019 is recomputed following a certain method.The same is arrived at using the SYD.SYD = 1 +2+ 3 +4 +5 = 152016 (5/15 x 900,000)300,0002017 (4/15 x 900,000)240,0002018 (3/15 x 900,000)180,000Accumulated depreciation - January 1, 2019720,000
Accordingly, the SYD is followed for 2019.Depreciation for 2019 (2/15 x 900,000)120,000Problem 27-10 (AICPA Adapted)Bergen Company purchased factory equipment which was installed and put into service January1, 2019 at a total cost of PI,280,000.

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