Question
Please answer. ASAP 11. Takatak, Inc., uses the group depreciation method for its furniture account. The depreciation rate used for furniture is 21%. The balance
Please answer. ASAP
11. 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).
Purchased Cost Selling Price
P35,000 P27,000 P8,000
The carrying amount of furniture at December 31,
2020 is
a. P71,070 c. P63,070
b. P64,750 d. P44,070
12. Kuya Company uses hand tools in its manufacturing
activities. On January 1, 2020, there are 800 of such
tools on hand at a cost of P200 each. Acquisition and
retirement in the year 2020 are:
Acquisition Retirement
Estimated value
at year end
400 @ P300 300 @ P50 P200,000
Assuming that retirements are on a first-in, first-out
basis, which of the following statements is true?
a. The depreciation using the retirement method is
P60,000.
b. The depreciation using the replacement method is
P90,000.
c. The depreciation using the inventory method is
P75,000.
d. The retirement method yields the lowest amount of
depreciation compared to replacement and
inventory methods.
13. Pantabangan Company takes a full year's depreciation
in the year of an assets acquisition, and no
depreciation in the year of disposition. Data relating to
one depreciable asset acquired in 2018, with residual
value of P900,000 and estimated useful life of 8 years,
at December 31, 2019 are:
Cost P9,900,000
Accumulated depreciation 3,750,000
Using the same depreciation method in 2018 and
2019, how much depreciation should Pantabangan
record in 2020 for this asset?
a. P1,125,000 c. P1,650,000
b. P1,250,000 d. P1,500,000
14. The residual value, the useful life of an asset and the
depreciation method applied to an asset shall be
reviewed
a. At least at each financial year-end.
b. At least every two years.
c. At least every three years.
d. Only if there is an indication they may have
changed since the most recent annual reporting
date.
15. As of January 1, 2020, Seniors decided to change the
method of computing depreciation on its sole piece of
equipment from the sum-of-the-years' digits method
to the straight-line method. The equipment, acquired
in January 2017 for P520,000, had an estimated life of
five years and a salvage value of P20,000. The
amount of the depreciation expense for 2020 is
a. P100,000 c. P50,000
b. P 60,000 d. P42,000
16. Useful life of Property, Plant and Equipment is:
a. The period over which an asset is expected to be
available for use by an entity.
b. The number of production or similar units expected
to be obtained from the asset by an entity.
c. Either a or b.
d. Neither a nor b.
17. Which of the following factors are considered in
determining the useful life of an asset?
I. Expected usage of the asset
II. Expected physical wear and tear
III. Technical or commercial obsolescence
IV. Legal or similar limits on the use of the asset
a. I, II, III and IV
b. I, II and III only
c. I, II and IV only
d. I and II only
18. On January 1, 2018, Paete Company signed a 12-year
lease for a building. Paete has an option to renew the
lease for an additional 8-year period on or before
January 1, 2022. During January 2020, Paete made
substantial improvements to the building. The cost of
the improvements was P3,600,000, with an estimated
useful life of 15 years. At December 31, 2020, Paete
intended to exercise the renewal option. Paete has
taken a full year's amortization on this improvement.
What should be the depreciation charge for the year
ended 31 December 2020?
a. P360,000 c. P240,000
b. P300,000 d. P200,000
19. Which statement is incorrect regarding derecognition
of property, plant and equipment?
a. Derecognition is the removal of a previously
recognized asset from an entity's statement of
financial position.
b. An asset should be removed from the statement of
financial position on disposal or when it is
withdrawn from use and no future economic
benefits are expected from its disposal.
c. The gain or loss on disposal is the difference
between the net disposal proceeds and the
carrying amount and should be recognized in the
income statement.
d. Gains on disposal of property, plant and equipment
may be classified as revenue.
20. Entity A acquired an asset that had a cost of P130,000.
The asset is being depreciated over a 5-year period
using the sum-of-the-years' digit method. It has a
salvage value estimated at P10,000. The loss/gain if
the asset is sold for P38,000 at the end of the third
year is
a. P4,000 gain c. P68,000 loss
b. P20,000 loss d. P92,000 loss
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