At the beginning of current year, Apple Company purchased a plating machine for P5,400,000. The entity received a government grant of P400,000 toward this capital cost. The machine is to be depreciated on a 20% reducing balance basis over 10 years. The estimated residual value is P200,000. Required: Prepare journal entries for the current year, assuming the grant is accounted for as: a. Deferred income b. Deduction from asset
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- At the beginning of Year 1, Cactus Company has three employees: A, B, and C. Employee A has 3 expected years of future service. Employee B has 4 expected years of future service, and Employee C has 5 expected years of future service. Using the year-of-future-service method, compute the amortization fraction for Years 1 through 5 that Cactus would use to amortize its prior service cost.On January 1, 2021, Raquel Company purchased a machine for 3,000,000. The entity received a government grant of 500,000 in respect of this asset. The policy is to depreciate the asset over 5 years on a straight line basis and to treat the grant as deferred income. On January 1, 2023, the grant became fully repayable because of non compliance with conditions. Required: Prepare journal entries for 2021, 2022 and 2023.At the beginning of the current year, Peace Company purchased a machine for P 7,000,000 and received a government grant of P 1,000,000 toward the capital cost. The machine is to be depreciated on a straight line basis over 5 years and estimated to have a residual value of P 500,000 at the end of this period 1. The journal entry to record the government grant as a deferred revenue: 2. The journal entry to recognize income from government grant:
- On August 1, 2018, Banco Company purchased a new machine on a deferred payment basis. A down payment of P 100 000 was made and 4 monthly installments of P 250 000 each are to be made beginning on September 1, 2018. The cash equivalent price of the machine was P 950 000. The entity incurred and paid installation costs amounting to P 30 000. What is the amount to be capitalized as cost of the machine?On january 1, 2022, Sarah Company purchased a machine for 8,500,000 and received a government grant of 1,000,000 toward the asset cost. The accounting policy is to treat the grant as a reduction in the cost of the asset. The machine is to be depreciated on a straight line basis over 5 years with a residual value of 500,000. On january 1, 2024, the grant became fully repayable because of noncompliance with conditions. 1. What amount should be reported as depreciation for 2022? a. 1,700,000 b. 1,600,000 c. 1,500,000 d. 1,400,000 2. What amount should be reported as depreciation for 2024? a. 1,400,000 b. 1,800,000 c. 1,600,000 d. 2,000,000On January 2, 2022, BRACE company purchased a new machine on a deferred payment basis. A down payment of P 100,000 was made and a non interest bearing note was issued for 4 monthly instalments of P 250,000 each. The cash equivalent price of the machine was P 950,000. The entity incurred and paid installation costs amounting to P 30,000. Prepare the journal entry on January 2, 2022:
- Bilmoco Company purchased a new machine on a deferred payment basis. A down-payment of P100,000 was made and 4 monthly installments of P250,000 are to be made at the end of each month. The cash equivalent price of the machine was P950,000. The entity incurred and paid installation costs amounting to P30,000. What is the amount to be capitalized as cost of the machine?On April 1, 2022 Blo Inc. receives a 6-year $60,000 note in exchange for a parcel of land. The cost of the land was $35,000. Neither the market rate nor the fair value of the land can be determined. Notes of similar risk carry a 12% imputed rate of interest. The financial year ends December 31. a. The present value of the note is $Answer b. There was a (gain or loss) Answer on the sale of the land of $AnswerProton Company purchased a new equipment on a deferred payment basis. A down payment of P50,000 was made and four monthly installments of P125,000 are to be made at the end of each month. The cash equivalent price of the machine was P475,000. The company incurred and paid installation costs amounting to P15,000. At what amount shall the equipment be capitalized? a. P565,000 b. P490,000 c. P475,000 d. P550,000
- A company purchases an asset that costs $30,000. This asset qualifies as 3-year property under MACRS The company uses an after-tax discount rate of 13% and faces a 40% income tax rate, (a) Use the appropriate present value factors found in Appendix C. Table 1, to determine the present value of the depreciation deductions for this firm over the specified four-year period. Refer to Exhibit.12.4. (Round depreciation expense to 2 decimal places.) Depreciation Deduction Tax Present Values Sipped Vear Savings 21 3. 4A company purchased $206,000 of fixed assets that are classified as five-year MACRS property. The MACRS rates are 2, 32, 192, 1152 1152, and .0576 for Years 1 to 6, respectively. What will the accumulated depreciation be at the end of Year 4 if the tax rate is 24 percent and no bonus depreciation is taken? Instruction: Enter your response rounded to two decimal places.On January 2, 2020, ABC Co. purchased a machine on credit terms 2/10, n/30. The invoice price was P40,000. Additional costs incurred in connection with the machine are as follows: Transportation-in: P1,200 Installation cost: P700 Testing costs prior to regular operation: P550 If the invoice is paid February 1, the acquisition cost of the machine must be a. P41,650 b. P41,100 c. P40,400 d. P39,200 e. answer not given