1

PROBLEM 6: MULTIPLE CHOICE: COMPUTATIONAL 1. On January 2, 2004, Pine Corp. replaced its boiler with a more efficient one. The following information was available on that date: Purchase price of new boiler P120,000 Carrying amount of old boiler 5,000 Fair value of old boiler 3,000 Installation cost of new boiler 10,000 The old boiler was sold for P3,000. What amount should Pine capitalize as the cost of the new boiler? a. P130,000. c. P125,000. b. P122,000. d. P120,000. (Adapted)