1. On January 1, 2021 the Emming Corporation purchased some machinery. The machinery has an estimated life of 10 years and an estimated residual value of P5, 000. The depreciation on this machinery was P20,000 in 2023.

Required

Compute the acquisition cost of the equipment under the following depreciation methods:

1. Straight-line

2. Sum-of-the-years'-digits

3. Double-declining-balance

4. The Loban Company purchased four cars for P 9,000 each, and expects that they would be sold in three years for P1,500 each. The company uses group depreciation on a straightline basis.

Required

1. Make journal entries to record the acquisition and the first year's depreciation.

2. If one of the cars is sold at the beginning of the second year for P 7,000, what journal entry is required?

5. The Wilcox Company acquires four machines that have the following characteristics:

Machine Cost Estimated Residual Value Estimated Service Life

A P26,000 P2,000 6 years B 19,000 1,000 9 C 30,000 5,000 5 D 28,000 - 7 Required

1. Make journal entries to record the acquisition and the first year's depreciation, assuming that the composite method is used on a straight-line basis.

2. If the company sells machine B after four years for P 10,000 prepare the journal entry.

6. On May 10, 2021, the Horan Company purchased equipment for P 25,000. The equipment has an estimated service life of five years and zero residual value. Assume that straight- line depreciation is used.

Required

Compute the depreciation for 2021 for each of the following four alternatives:

1. The company computes depreciation to the nearest day. (Use 12 months of 30 days each.)

2. The company computes depreciation to the nearest month. Assets purchased in the first half of the month are considered owned for the whole month.

3. The company computes depreciation to the nearest whole year. Assets purchased in the first half of the month are considered owned for the whole year.

4. The company records one-half year's depreciation on all assets purchased during the year.

3. On January 1, 2022, the Vallahara Company purchased machinery for P 650,000 which it installed in a rented factory. It is depreciating the machinery over 12 years by the straight-line method to a residual value of P 50,000. Late in 2026, because of increasing competition in the industry, the company believes that its asset may be impaired and will have a remaining useful life of five years, over which it estimates the asset will produce total cash inflows of P 1,000,000 and will incur total cash outflows of P 825,000. The cash flows are independent of the company's other activities and will occur evenly each year. The company is not able to determine the fair value based on a current selling price of the machinery. The company's discount rate is 10%.

Required

1. Make schedules to determine whether, at the end of 2022, the machinery is impaired and, if so, the impairment loss to be recognized.

2. If the machinery is impaired, prepare the journal entry to record the impairment.

8. The Bailand Company purchased a building for P 210,000 that had an estimated residual value of P10,000 and an estimated service life of 10 years. The company purchased the building four years ago and has used straight-line depreciation. At the beginning of the fifth year (before it records depreciation for the year), the following independent situations occur:

1. The company estimates that the asset has eight years' life remaining (for a total of 12 years).

2. The company changes to the sum-of-the-years'-digits method.

3. The company discovers that the estimated residual value has been ignored in the computation of the depreciation.

Required:

For each of the independent situations, make all the journal entries relating to the building for the fifth year. Ignore income taxes.