DEPRECIATION PROBLEM #1 AA Company purchased a machine at a cost of P635,000 on March 10,2019. It was estimated that the machine would have a residual value of P35,000. Statistics relating to the machine over its estimated useful life were: Estimated useful life: Years 5 Service hours 60,000 Production output 150,000 Actual operations for 2019, 2020 and 2021: Service hours Unit produced 2019 14,000 34,000 2020 13,000 32,000 2021 10,000 25,000 REQUIRED: 1. Compute for the depreciation per service hour. 2. Compute for the depreciation per unit produced. 3. Compute for the depreciation expense for the year 2019 and 2020 using: a. Straight line method b. SYD (Sum of the years' digits) c. Service hours d. Units of production 4. Compute for the carrying amount of the machine as of December 31, 2019 and December 31, 2020 using: a. Straight line method b. SYD C. Service hours d. Units of production 5. For the following questions, use the straight line method of depreciation: a. Assuming that the machine was sold on October 1, 2020 for P510,000, 1. How much is the carrying amount of the machine as of October 1, 2020? ii. How much is the gain/loss on sale? Specify your answer. b. Assuming that on January 1, 2021, the company decided to change the depreciation method to units of production: 1. How much is the depreciation expense for 2021? ii. How much is the carrying amount of the machine as of December 31, 2021? C. Assuming that on March 10, 2021, the company discovered that the useful life of the machine was 10 years from the date of purchase: 1. How much is the depreciation expense for 2021? ii. How much is the carrying amount of the machine as of December 31, 2021? d. Assuming that on March 10, 2021, the company incurred costs which extended the life of the machine for another 2 years: 1. How much is the depreciation expense for 2021? ii. How much is the carrying amount of the machine as of December 31, 2021? e. Assuming that on March 10, 2021, the company incurred costs which extended the life of the machine to 6 years: i. How much is the depreciation expense for 2021? ii. How much is the carrying amount of the machine as of December 31, 2021? Cost PROBLEM #2 BB Company's depreciation policy on machinery and equipment is as follows: A full year's depreciation is taken in the year of an asset's acquisition. NO depreciation is taken in the year of an asset's disposition. The estimated useful life is five years. The straight-line method is used. On June 30,2019, BB Company sold for P2,300,000 a machine acquired in 2016 for P4,200,000. The estimated residual value was P600,000. REQUIRED: 1. What is the carrying amount of the machine as of June 30, 2019? 2. What amount of gain or loss on disposal should BB Company record in 2019? Specify your answer. PROBLEM #3 CC Company used a hand tool in the manufacturing activities. On January 1, 2019, there are 800 of such tools on hand at cost of P200 each. Acquisition and retirement during 2019 and 2020 are: Retirement and Estimated Acquisition and Retirement value of tools proceeds at year-end 2019 400 @ P300 300 @ P50 200,000 2020 900 @ P400 700 @ P70 350,000 Retirement may be assumed to be on first-in, first-out basis. REQUIRED: Compute for the carrying amount of the tools as of December 31, 2019 and 2020 under the following methods: a) Retirement b) Replacement c) Inventory DEPLETION PROBLEM #4 DD Company was engaged in the rock and gravel business. The following transactions relate to the acquisition and development of an extensive gravel pit 2019 Cost of acquisition and development 960,000 Estimated output 2,400,000 tons Production 1,000,000 tons 2020 Additional development cost 490,000 Production 600,000 tons 2021 Additional development cost 500,000 New estimate of remaining output 2,500,000 tons Production 700,000 tons REQUIRED: 1. Compute for the carrying amount of the asset for the year ending 2019, 2020, and 2021. 2. Compute for the depletion expense for the year ending 2019, 2020, and 2021. DEPRECIATION PROBLEM #1 AA Company purchased a machine at a cost of P635,000 on March 10,2019. It was estimated that the machine would have a residual value of P35,000. Statistics relating to the machine over its estimated useful life were: Estimated useful life: Years 5 Service hours 60,000 Production output 150,000 Actual operations for 2019, 2020 and 2021: Service hours Unit produced 2019 14,000 34,000 2020 13,000 32,000 2021 10,000 25,000 REQUIRED: 1. Compute for the depreciation per service hour. 2. Compute for the depreciation per unit produced. 3. Compute for the depreciation expense for the year 2019 and 2020 using: a. Straight line method b. SYD (Sum of the years' digits) c. Service hours d. Units of production 4. Compute for the carrying amount of the machine as of December 31, 2019 and December 31, 2020 using: a. Straight line method b. SYD C. Service hours d. Units of production 5. For the following questions, use the straight line method of depreciation: a. Assuming that the machine was sold on October 1, 2020 for P510,000, 1. How much is the carrying amount of the machine as of October 1, 2020? ii. How much is the gain/loss on sale? Specify your answer. b. Assuming that on January 1, 2021, the company decided to change the depreciation method to units of production: 1. How much is the depreciation expense for 2021? ii. How much is the carrying amount of the machine as of December 31, 2021? C. Assuming that on March 10, 2021, the company discovered that the useful life of the machine was 10 years from the date of purchase: 1. How much is the depreciation expense for 2021? ii. How much is the carrying amount of the machine as of December 31, 2021? d. Assuming that on March 10, 2021, the company incurred costs which extended the life of the machine for another 2 years: 1. How much is the depreciation expense for 2021? ii. How much is the carrying amount of the machine as of December 31, 2021? e. Assuming that on March 10, 2021, the company incurred costs which extended the life of the machine to 6 years: i. How much is the depreciation expense for 2021? ii. How much is the carrying amount of the machine as of December 31, 2021? Cost PROBLEM #2 BB Company's depreciation policy on machinery and equipment is as follows: A full year's depreciation is taken in the year of an asset's acquisition. NO depreciation is taken in the year of an asset's disposition. The estimated useful life is five years. The straight-line method is used. On June 30,2019, BB Company sold for P2,300,000 a machine acquired in 2016 for P4,200,000. The estimated residual value was P600,000. REQUIRED: 1. What is the carrying amount of the machine as of June 30, 2019? 2. What amount of gain or loss on disposal should BB Company record in 2019? Specify your answer. PROBLEM #3 CC Company used a hand tool in the manufacturing activities. On January 1, 2019, there are 800 of such tools on hand at cost of P200 each. Acquisition and retirement during 2019 and 2020 are: Retirement and Estimated Acquisition and Retirement value of tools proceeds at year-end 2019 400 @ P300 300 @ P50 200,000 2020 900 @ P400 700 @ P70 350,000 Retirement may be assumed to be on first-in, first-out basis. REQUIRED: Compute for the carrying amount of the tools as of December 31, 2019 and 2020 under the following methods: a) Retirement b) Replacement c) Inventory DEPLETION PROBLEM #4 DD Company was engaged in the rock and gravel business. The following transactions relate to the acquisition and development of an extensive gravel pit 2019 Cost of acquisition and development 960,000 Estimated output 2,400,000 tons Production 1,000,000 tons 2020 Additional development cost 490,000 Production 600,000 tons 2021 Additional development cost 500,000 New estimate of remaining output 2,500,000 tons Production 700,000 tons REQUIRED: 1. Compute for the carrying amount of the asset for the year ending 2019, 2020, and 2021. 2. Compute for the depletion expense for the year ending 2019, 2020, and 2021