Cost of dismantling the old machine to be replaced by the new machine 50000

Cost of dismantling the old machine to be replaced by

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Cost of dismantling the old machine to be replaced by the new machine50,000Cost of testing and trial runs including used machine supplies30,000Consultant fee for the acquisition of machinery40,000Initial estimate of cost of dismantling the machinery for which Nestle has the presentobligation.50,000Initial Operating Losses100,000Cost of opening the new factory200,000Cost of introducing new product produced by themachinery300,000Cost of relocating the employees 400,000Cost of training employees who will operate themachine100,000Administrative and general overhead 200,000Required: Based on the result of your audit, determine the following class of Property, Plant and Equipment:____________1. Cost of Land____________2. Cost of Factory Building____________3. Cost of Machinery____________4. Cost of Land Improvement____________5. Total amount that should be expensed as incurredCPA Board Operation Page 4 of 6
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Depreciation Methods Problem 10. As a newly hired assurance associate of Ernst & Young – Philippines, you are asked to audit the depreciation of the newlyacquired Property, Plant and Equipment of Fortune Tobacco Inc. The schedule below is provided by the Property, Plant and EquipmentAccountant of Fortune Tobacco Inc. for the year ended January 1,2011:Class of PPEDate of AcquisitionCostUseful LifeResidual ValueDep.MethodBuildingJanuary 1,2002P20,000,00020 yearsP2,000,000STLMachineryJanuary 1,20071,000,000100,000 units100,000Unit MethodDelivery TruckJanuary 1,20092,000,0005 years500,000SYDEquipmentJanuary 1,20103,000,0003 years600,000200%DecliningThe following data are also obtained from the different supporting documents:On January 1,2011, Nestle determined that the useful life of the building is 25 years from the date of acquisition andrevised the residual value to P1,000,000.For the year ended December 31, 2011, Nestle produced 10,000 units of product using the machinery. As ofDecember 31, 2010, Nestle has cumulative produced 30,000 units of product using the machinery.On January 1,2011, Nestle changed the depreciation method of the delivery truck from SYD method to Straight Linemethod and determined that the remaining life of delivery truck as of this date is 4 years. The residual value is alsorevised to P50,000.On December 31,2011, Nestle sold the building for P10,000,000.On December 31,2011, a fire razed the equipment. There is a fire insurance for the equipment and Nestle receivedP100,000.Required: Based in the result of your audit, determine the following:____________1. Depreciation expense of building for 2011____________2. Depreciation expense of machinery for 2011____________3. Depreciation expense of delivery truck for 2011____________4. Depreciation expense of equipment for 2011____________5. Gain or loss on sale of building____________6. Gain or loss on derecognition of equipment as a result of fire____________7. Carrying value of machinery on December 31,2011____________8. Carrying value of delivery truck on December 31,2011____________9. Net debit or (credit) to January 1,2011 Retained Earnings as a result of accounting changesProblem 11. COMPO Inc., a newly formed entity on January 1, 2015, is using the composite method for the depreciation of all of itsitems of property, plant and equipment:PPE AccountHistorical CostResidual ValueUseful LifeMachineP3,500,000500,0005 yearsEquipment4,300,000300,0008 yearsBuilding8,200,000
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