Problem 7: A transcript of the Company's Machinery and Equipment account for 2017 as follows: Your examination reveals the following information: a. The company uses a ten-year life for all machinery and equipment for depreciation purposes. Depreciation is computed by the straight-line method. Six months depreciation is recorded in the year of acquisition or retirement. For 2017 , the company recorded depreciation of Php 15,000 on Machinery and Equipment. b. There are two items in the January 1 balance which have been fully depreciated. c. The jack hammer was purchased for Php 7,000 from a firm in financial distress. The chief engineer and a used machinery dealer agreed that the practically new machine was worth Php 10,000 in the open market. The company paid Php 7,000 and a credit of Php 3,000 was made to Sundry Income. d. For production reasons, the new air compressor was installed in a small building that was erected in 2017 to exclusively house the compressor. The cost of the building, which has a 15 year life, was Php 40,000 and is included in the Php 120,000 voucher for the air compressor. e. The vacuum cleaner was delivered to the home of the company president for personal use. f. On September 1 , the company determined that a production casting machine was no longer needed and advertised it for sale for Php 2,000 after determining from a used machinery dealer that this was its market value. The casting machine had been purchased fro Php 5,000 on September 1,2012. g. The company elected to exercise an option under a lease purchase agreement to buy the electric drill by paying Php 6,000. The drill had been installed on February 1,2017 , at a monthly rental of Php 300. h. On November 1, a motor control was purchased for Php 40,000. A Php 4,000 down payment was made and the balance will be paid in monthly installment over a three year period. The December 1 includes interest charges of Php 360 . Legal title to the motor control will pass to the company until the payments are completed