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1.)Cabiao Company purchased a new printing machine on December 1 at an invoice price of P4,000,000 with terms 2/10, n/30. On December 15, Cabiao paid the required amount for the machine.  The installation costs were P50,000 and the employees received training on how to use the machine, at a cost of P20,000.  Before using the machine to print customers' orders, a test was undertaken and the paper and ink cost P5,000.  What amount should be capitalized as cost of the machine?

A.3,975,000

B.3,995,000

C.3,970,000

D.4,075,000

2.)Takatak, Inc., uses the group depreciation method for its furniture account. The depreciation rate used for furniture is 21%.  The balance in the furniture account on December 31, 2019, was P125,000, and the balance in Accumulated Depreciation - Furniture was P61,000.  The following purchases and dispositions of furniture occurred in 2020 (assume that all purchases and disposals occurred at the beginning of each year).

 

Assets Sold

Assets Purchased

Cost

Selling Price

P35,000

P27,000

P8,000

The carrying amount of furniture at December 31, 2020 is

Group of answer choices

A.P63,070

B.P71,070

C.P64,750

D.P44,070

3.)Booster Co purchased a building on 1 January 2010 for P1,250,000. At acquisition, the useful life of the building was 50 years.  Depreciation is calculated on the straight-line basis.  On 1 January 2020, the building was revalued to P1,600,000.  Booster Co has a policy of transferring the excess depreciation on revaluation from the revaluation surplus to retained earnings.

 

Assuming no further revaluations take place, what is the balance on the revaluation surplus at 31 December 2020?

P585,000

 

P600,000

 

P350,000

 

P341,250

 

 

 

Answer & Explanation
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