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Provide the following with solutions: 1. The total depreciation for the year ended December 31, 2020 is 2. The carrying amount of production machine as
Provide the following with solutions:
1. The total depreciation for the year ended December 31, 2020 is
2. The carrying amount of production machine as of December 31, 2020 is
In the audit of the books of Yellow Corporation for the year 2020, the following items and information appeared in the Production Machine account of the client: Date Particulars Debit Credit 01/01 Balance-Machine 1, 2, 3, and 4 at P180,000 each P 720,000 02/28 Machine 5 396,000 Machine 1 P 6,000 09/01 Machine 6 192,000 12/01 Machine 7 432,000 The Accumulated Depreciation account contained no entries for the year 2020. The balance on January 1, 2020 per your audit, was as follows: Machine 1 P168,750 Machine 2 78,750 Machine 3 67,500 Machine 4 45,000 Based on your further inquiry and verification, you noted the following: 1. Machine 5 was purchased for cash; it replaced Machine 1, which was sold on this date for P6,000. 2. Machine 2 was destroyed by the thickness of engine oil used leading to explosion on December 1, 2020. Machine 7 was to replace Machine 2. 3. Machine 3 was traded in for Machine 6 at an allowance of P24,000; the difference was paid in cash and charged to Production Machine account. 4. Depreciation rate is recognized at 25% per annumStep by Step Solution
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