Information pertaining to Towns Corporation's property, plant and equipment for 2020 is presented

below:

Account Balances at January 1, 2020

Debit Credit

Land P1,500,000

Building 2,400,000

Accumulated depreciation P642,974

Machinery and equipment 1,800,000

Accumulated depreciation 648,000

Automotive equipment 1,150,000

Accumulated depreciation 887,143

Depreciation methods used and useful life

Building - 150% declining balance; 20 years

Machinery and equipment - Straight-line; 10 years

Automotive equipment - Sum-of-year's-digits; 6 years

The salvage value of the assets is estimated at 10% of the assets cost. Depreciation is computed to

the nearest month. All assets were acquired at the beginning of 2016.

Transactions during 2020 and other information:

On January 1, Towns Corporation purchased a new automotive equipment for P800,000 cash and

trade-in of an old automotive equipment with an original cost of P600,000. The new car has a cash

price of P950,000; market value of trade-in is not known.

On June 30, a machine with an original cost of P250,000, was totally destroyed by fire. Town

Corporation recovered P50,000 from its insurance company.

On July 1, a replacement machinery and equipment were acquired in exchange of 8,000 shares of the

company's own ordinary shares (P50 par value). The new machinery and equipment had a cash price

of P480,000. Additional costs of P5,000 for freight and P25,000 for installation were incurred.

Requirements:

1. What is the gain or loss on the trade-in on January 1?

2. How much impairment loss should be recognized from the machinery on June 30?

3. What is the correct depreciation expense for 2020 for the following PPE items:

a. Building

b. Machinery and equipment

c. Automotive equipment

4. What is the correct carrying values as of December 31, 2020 for the following PPE items:

a. Building

b. Machinery and equipment

c. Automotive equipment