Problem 26-6

a. Straight line d. Sum of years' digits

Year Depreciation Acc. Depreciation Carrying Amount Year Particular Depreciation Acc. Depreciation Book Value
(635k-35k/5yrs.) 635,000.00 (1+2+3+4+5) 635,000.00
2013 120,000.00 120,000.00 515,000.00 2013 5/15*600,000 200,000.00 200,000.00 435,000.00
2014 120,000.00 240,000.00 395,000.00 2014 4/15*600,000 160,000.00 360,000.00 275,000.00
2015 120,000.00 360,000.00 275,000.00 2015 3/15*600,000 120,000.00 480,000.00 155,000.00
2016 120,000.00 480,000.00 155,000.00 2016 2/15*600,000 80,000.00 560,000.00 75,000.00
2017 120,000.00 600,000.00 35,000.00 2017 1/15*600,000 40,000.00 600,000.00 35,000.00
600,000.00 600,000.00

b. Service Hours e. Double declining balance

Year Particular Depreciation Acc. Depreciation Book Value Year Particular Depreciation Acc. Depreciation Book Value
(600k/60k) 635,000.00 (100%/5=20%*2) 635,000.00
2013 14,000*10 140,000.00 140,000.00 495,000.00 2013 635,000*40% 254,000.00 254,000.00 381,000.00
2014 13,000*10 130,000.00 270,000.00 365,000.00 2014 381,000*40% 152,400.00 406,400.00 228,600.00
2015 10,000*10 100,000.00 370,000.00 265,000.00 2015 228,600*40% 91,440.00 497,840.00 137,160.00
2016 11,000*10 110,000.00 480,000.00 155,000.00 2016 137,160*40% 54,864.00 552,704.00 82,296.00
2017 12,000*10 120,000.00 600,000.00 35,000.00 2017 82,296 - 35,000 47,296.00 600,000.00 35,000.00
600,000.00 600,000.00

c. Production Method

Year Particular Depreciation Depreciation Book Value

(600k/150k) 635,000.00
2013 34,000*4 136,000.00 136,000.00 499,000.00
2014 32,000*4 128,000.00 264,000.00 371,000.00
2015 25,000*4 100,000.00 364,000.00 271,000.00
2016 29,000*4 116,000.00 480,000.00 155,000.00
2017 30,000*4 120,000.00 600,000.00 35,000.00
600,000.00
Problem 26-7
A. Straight line

2013 Cost 570,000 2014 Cost 570,000

Residual value (20,000) Residual value (20,000)
Depreciable Amount 550,000 Depreciable Amount 550,000
/ useful life 10 / useful life 10
55,000
*6/12
Depreciation- 2013 27,500 Depreciation- 2014 55,000

B. Working hours

Rate per hour= 550,000

50,000 hours
11

2013 3,000 hours x 11 33,000 2014 5,000 hours x 11 55,000

C. Output

Rate per unit= 550,000

200,000 units
3

2013 18,000 units x 2.75 49,500 2014 22, 000 units x 2.75 60,500

D. Sum of year's digit

SYD= 10+1 /2
10(5.5)
SYD= 55

July 1 2013 to June 30 2014

10/55 x 550,000 100,000

July 1 2014 to June 30 2015

9/55 x 550,000 90,000

2013 100,000 x 6/12 50,000 2014 Jan 1 to Jun 30

100,000 x 6/12 50,000
July 1 to Dec 31
90,000 x 6/12 45,000
95,000

E. Double declining

Rate 100/ 10 x 2 0

2013 570,000 x 20% x 6/12 57,000 2014 570,000 - 57,000 x 20% 102,600
PROBLEM 26-8

Sum of Years' Digits

Cost 1,200,000
Residual Value (120,000)
1,080,000

SYD= 8(8+1/2)
= 36

April 2013
1,080,000 x 8/36 =240,000

April 2014
1,080,000 x 7/36 =210,000

2013 Depreciation

240,000 x 9/12 =180,000

( April 1 to Dec 31)

2014 Depreciation
Jan 1 to March 31
(240,000 x 3/12) 60,000
April 1 to Dec 31
(210,000 x 9/12) 157,500
217,500
 Double Declining Balance

Straight line rate 100/8

12.5 x2
Double Declining Rate 25%

2013 Depreciation

1,200,000 x 25% x 9/12 225,000

( April 1 to Dec 31)

2014 Depreciation
1,200,000 - 225,000 x 25% 243,750
Problem 26-9

Requirement 1
960,000-60,000
Depreciation rate per hour 8,000 hours = 112.5

Service Hours Depreciation rate per hour

2013 1,000 112.5 = 112,500

2014 2,000 112.5 = 225,000

Requirement 2

Sum of half years 45

2013 (9/45 x 900,000 x 3/6 90,000

2014 January 1 – March 3(9/45 x 900,000 x 3/6) 90,000

April 1 – September(8/45 x 900,000) 160,000
October 1 – Decemb(7/45 x 900,000 x 3/6) 70,000
320,000
Problem 26-10

Fixed rate = 1.00 - .5623 = .4377

2013 (500,000 x .4377) 218,850.00

2014 (500,000 - 218,850) x .4377 123,059.00
2015 (500,000 - 341,909) x .4377 69,196.00
2016 (500,000 - 411,105 - 50,000) 38,895.00
450,000.00
Problem 26 - 11

Sunshine Company

a. Output Method Year Particular Depreciation Accum. Dep'n. Carrying amount

Invoice price 840,000 Acquisition cost
Freight in 35,000 (p. 1,070 B.) 920,000
Installation cost 45,000 (p. 1,070 D.) 2013 5,000 x 5 25,000 25,000 895,000
Cost of the machine 920,000 2014 20,000 x 5 100,000 125,000 795,000
Less: Residual value (20,000)
Depreciable amount 900,000
Divide: Est. useful life in terms of unit of output 180,000
Depreciation rate per unit 5

b. Double declining balance

Cost of asset 920,000 920,000
Residual value 20,000 2013 25% x 920,000 x 6/12 115,000 115,000 805,000
Est. useful life 8 years 2014 25% x 805,000 201,250 201,250 603,750
Straight line rate (100% / 8 years) 12.5%
Double declining rate (12.5% x 2) 25%

c. Sum of years' digits

SYD = Life (Life + 1 / 2)
= 8 (8 + 1 / 2) July 1 - Dec. 31, 2013 8 / 36 x 900,000 x 6/12 100,000
= 8 (4.5)
= 36 Jan.1 - June 30, 2014 8 / 36 x 900,000 x 6/12 100,000
July 1 - Dec. 31, 2014 7 / 36 x 900,000 x 6/12 87,500
187,500
Problem 26-12
Cost Residual Value Depreciable cost Life in yrs. Annual Depreciation
Machinery 310,000.00 10,000.00 300,000.00 5 60,000.00
Office Equipment 110,000.00 10,000.00 100,000.00 10 10,000.00
Building 1,600,000.00 100,000.00 1,500,000.00 15 100,000.00
Delivery Equipment 430,000.00 30,000.00 400,000.00 4 100,000.00
2,450,000.00 2,300,000.00 270,000.00

a. Composite rate = 270,000.00 c. Depreciation 270,000.00

2,450,000.00 Accumulated Depreciation 270,000.00
11.02%

b. Composite life = 2,300,000.00

270,000.00
8.52 yrs.
Problem 26-13

Assets Cost Residual Val Depreciable Amt Useful life Annual Dep
Builiding 6,100,000 100,000 6,000,000 20 300,000
Machinery 2,550,000 50,000 2,500,000 5 500,000
Equipment 1,030,000 30,000 1,000,000 10 100,000
9,680,000 9,500,000 900,000

a. 900,000
/ 9,680,000
= 0.09297520661157
or 9.3

b. 9,500,000
/ 900,000
= 10.56 years

c. Depreciation 900,000
Accum. Dep. 900,000

d. Cash 40,000
Accum. Dep. 2,510,000
Machinery 2,550,000

e. Depreciation 663,090
Accum. Dep. 663,090

9,680,000
less 2,550,000
7,130,000
*9.3% 663,090
Problem 26-14

2013
Jan. 1 Machinery 900,000
Cash 900,000

Dec. 31 Depreciation (20% x 900,000) 180,000

Accumulated depreciation 180,000

2014
Dec. 31 Depreciation 180,000
Accumulated depreciation 180,000

2015
Dec. 31 Depreciation 180,000
Accumulated depreciation 180,000

2016
Dec. 31 Depreciation 180,000
Accumulated depreciation 180,000

Cash 10,000
Accumulated depreciation 170,000
Machinery (4 x 45,000) 180,000

2017
Dec. 31 Depreciation (720,000 x 20%) 144,000
Accumulated depreciation 144,000

Cash 15,000
Accumulated depreciation 615,000
Machinery (14 x 45,000) 630,000

2018
Dec. 31 Depreciation 9,000
Accumulated depreciation 9,000

Remaining cost 90,000

Less: Balance of accumulated depreciation 79,000
Carrying amount 11,000
Less: Salvage proceeds 2,000
Maximum depreciation 9,000

Cash 2,000
Accumulated depreciation 88,000
Machinery 90,000
Problem 26-15
Requirement 1
Old Machinery Overhauled (240,000+60,000) 300,000
Acccumulated Depreciation
2010 (240,000/8) 30,000
2011 (240,000/8) 30,000
2012 (240,000/8) 30,000 (90,000)
Book Value - January 1,2013 210,000

Old Machinery Overhauled (210,000/7) 30,000

Remaining cost of old machinery (1,152,000 – 240,000 / 8) 114,000
New machinery (460,800 / 8 x 5/12) 24,000
Total Depreciation for 2013 168,000

Requirement 2
Old Machinery 1,152,000
New Machinery 460,800
Cost of Overhaul 60,000
Total Cost 1,672,800
Accumulated Depreciation Jan 2013 432,000
Depreciation for 2013 168,000 600,000
Carrying Amount - December 31, 2013 1,072,800
Problem 26-16

Main machine (7,500,000 / 10) Php 750,000

First component- Jan 1 - Apr 1, 2013 Php 50,000
(1,200,000 / 6 x 3/12)
Second component- Apr 1 - Dec 31, 2013 Php 300,000
(2,000,000 - 400,000 /4 x 9/12)

Total depreciation for 2013 Php1,100,000

Problem 26 - 17

March 31, 2014 Tools 40,000

Cash 40,000

July 31, 2014 Tools 20,000

Cash 20,000

December 31, 2014 Cash 4,000

Tools 4,000

Depreciation 46,000
Tools 46,000

Balance (140 + 40 + 20 - 4) 196,000

Inventory of tools (150,000)
Depreciation 46,000
Problem 26-18
Retirement Method Replacement Method

March       1 Electric meters 250,000.00 March       1 Depreciation 230,000.00

Cash 250,000.00 Cash 230,000.00

1 Cash 20,000.00 July            1 Electric meters 400,000.00

Depreciation 160,000.00 Cash 400,000.00
Electric meters 180,000.00
December 1  Depreciation 185,000.00
July            1 Electric meters 400,000.00 Cash 185,000.00
Cash 400,000.00

December 1  Electric meters 200,000.00

Cash 200,000.00

1 Cash 15,000.00
Depreciation 135,000.00
Electric meters 150,000.00
Problem 26-19
1. RETIREMENT METHOD
2013 Tools (400*300) 120,000
Cash 120,000

Cash (300*50) 15,000

Depreciation 45,000
Tools (300*200) 60,000
2014 Tools (900*400) 360,000
Cash 360,000

Cash (700*70) 49,000

Depreciation 111,000
Tools 160,000

Cost of tools retired:

2013 Retirement (800-300) 500 units * 200 100,000
2014 Retirement (700-500) 200 units * 300 60,000
1,000 units 160,000
2. REPLACEMENT METHOD
2013 Tools (100*300) 30,000
Depreciation (300*300) 90,000
Cash 120,000
Acquistion 400
Retirement (300)
Tools in excess 100

Cash (300*50) 15,000

Depreciation 15,000
2014 Tools (200*400) 80,000
Depreciation (700*400) 280,000
Cash 360,000
Acquistion 900
Retirement (700)
Tools in excess 200

Cash (700*70) 49,000

Depreciation 49,000
3. INVENTORY METHOD
2013 Tools (400*300) 120,000
Cash 120,000

Cash 15,000
Tools (300*50) 15,000

Depreciation (265,000-200,000) 65,000

Tools 65,000
Balance of tools account (160,000+120,000) 280,000
Proceeds from retirement (300*50) (15,000)
Depreciation 265,000
Less: Estimated value (200,000)
Depreciation 65,000
2014 Tools (900*400) 360,000
Cash 360,000

Cash 49,000
Tools (700*70) 49,000

Depreciation 161,000
Tools 161,000
Balance of tools account (200,000+360,000) 560,000
Proceeds from retirement (700*70) (49,000)
Depreciation 511,000
Less: Estimated value (350,000)
Depreciation 161,000
Problem 26-20

1. Land (350,000 + 450,000) 800,000

Land acquired (380,000 +25,000 +45,000) 450,000

2. Depreciation of land improvements (180,000 /15) 12,000

3. Depreciation of building (4.5M - 1.05M) x 7.5% 258,750

4. Depreciation of machinery & equipment

(1.16M - 60,000) / 10 110,000
(300,000 / 10) 30,000
(60,000 / 10) x 6/12 3,000
143,000

5. Fixed rate (100% / 3) x 1.5 50%

(1.8M - 1.344M) x 50% 228,000

Problem 26-21

Beginning Balance of the Land 875,000

Acquisition of the Land (150,000 / 750,000 x 1,250,000) 250,000
Total Cost of Land 1,125,000

Old- Building (7,500,000 – 1,644,500 x 8%) 468,440

New -Building (600,000/750,000 x 1,250,000 x 8%) 80,000
Depreciation of the building 2013 548,440

Machinery and Equipment (2,250,000 / 10) 225,000

Purchase Price July 1, 2013 (400,000 / 10 x 6/12) 20,000
Depreciation of Machinery and Equipment 2013 245,000

Depreciation – land improvements 2013 12,000 (192,000 / 12 x 9/12)

Problem 26-22

Depreciation for the Old Building Php467,220 Depreciation for Old Machinery Php138,000
6,000,000 - 1,327,800 * 10% 1,380,000/ 10

Depreciation New Building Php300,000 Depreciation New Machinery Php 20,000

Direct Cost Php2,220,000 Acquisition Cost Php356,000

Fixed Cost Php 375,000
15,000*25 Embedding Php 18,000
Variable Cost Php 405,000 Wall Demolition Php 7,000
15,000*27 Rebuilding of Wall Php 19,000

Total cost Php3,000,000 Total cost Php400,000

Total Depreciation for Building 2013 Php767,220 Total Depreciation for Machinery 2013 Php158,000