PROBLEM 18

DONATION WITHOUT CONDITION

Cost of PPE acquired through donation without condition shall be taken up at

its fair market value at the date it is acquired. All expenses incurred in connection
with the donated asset, such as delivery and installation costs, shall be included in
the amount recognized as asset. The fair value of the PPE shall be recognized as
"Income from Grants and Donations in Kind".

ENTITY A (Donee)
Motor Vehicle 1,010,000.00
Income from Grants and Donations in Kind 1,000,000.00
Cash - MDS, Regular 10,000.00

ENTITY Z (Donor)
Loss of Assets xxx
Accumulated Impairment Losses xxx
Accumulated Depreciation xxx
Motor Vehicle historical cost
Problem 19
DONATION WITH CONDITION

Where PPE is acquired through donation with conditions or restrictions,

a liability accounts shall be recognized until the conditions or restrictions
have been fulfilled.

Land 950,000.00
Other Deferred Credits 950,000.00
To recognize the fair value of the
land received as donation.

DILI NA LANG NI SYA.

PROBLEM 20
INTRA-AGENCY TRANSFER OF PPE

These shall be recognized at the carrying amount of the asset received.

The receiving department/office shall recognize the asset at its original
historical cost less accumulated depreciation and accumulated impairment
loss.

The Source Agency/Entity shall provide the Receiving Agency/Entity the

necessary documents/information on the transferred PPE such as the
remaining useful life of the PPE, among others.

BOOKS OF THE CENTRAL OFFICE

Accumulated Depreciaiton - ICT Eqjuipment 7,600.00

Subsidy to Regional Offices/Staff Bureaus 32,400.00
Information & Communication
Technology Equipment 40,000.00

BOOKS OF THE REGIONAL OFFICE

Information & Communication

Technology Equipment 40,000.00
Accumulated Depreciaiton - ICT Eqjuipment 7,600.00
Subsidy from Central Office 32,400.00

PROBLEM 21
INTER-AGENCY TRANSFER OF PPE

Transfer from one government agency to another shall be recognized by the recipient
agency at net carrying value. The transferor shall derecognize the PPE account upon
transfer.

Entity A - TRANSFEROR

Accumulated Depreciation 7,600.00

Accumulated Surplus/(Deficit) OR

Financial Assistance to NGAs (this account shall be 32,400.00

used if the transfer was made within the same year
of purchase)
ICT Equipment 40,000.00

ENTITY B - RECIPIENT AGENCY

ICT Equipment 32,400.00
Accumulated Surplus/(Deficit) OR
Subsidy from Other National Government
Agencies - account to be used if the transfer is 32,400.00
within the same year of purchase
e spell out jud ni sya during the tests
Problem 22
Depreciation expense shall be recognized on a monthly basis.

Monthly depreciation = P22,000 - (P22,000 x 5%) / 60 months = P348.33

June 30, 2014 - no depreciation expense recognized

July 31, 2014

Depreciation - Machinery and Equipment 348.33
Accumulated Depreciation - Machinery and Equipment 348.33
To recognize depreciation for
July 2014.
Problem 23
Each part of an item of PPE with a cost that is significant in relation to the total cost of the item
shall be recorded and depreciated separately.

Residual Estimated
Parts Amount Value Life Depreciation

Engine 15,000,000.00 750,000.00 5 years (60 months) 237,500.00

Passenger seats 5,000,000.00 250,000.00 5 years (60 months) 79,167.00
Remaining parts 45,000,000.00 2,250,000.00 20 years (240 months) 178,125.00
65,000,000.00 494,792.00

Depreciation Expense - Transportation Equipment 494,792.00

Accumulated Depreciation - Transportation Equipment
 15M - 750T divided by 60 months

494,792.00