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Problem 1.

Revamonte Company provided the following data pertaining to a machinery on the date of revaluation:
Cost Replacement Cost
Machinery 4,500,00 7,200,000
Accumulated Depreciation 900,000
Age of asset 3 years

Required:
1. Appreciation or revaluation increase ___________.
2. Carrying amount ___________.
3. Depreciated replacement cost ____________.
4. Revaluation surplus ____________.
5. What is the original useful of the asset ______.

Problem 2.On January 1, 2015, Montefalco Company reported the following account balances relating to property, plant
and equipment:

Land 2,000,000
Building 15,000,000
Accumulated Depreciation 3,750,000
Machinery 3,000,000
Accumulated Depreciation 1,500,000
Assets have been carried at lost since their acquisition. All assets were acquired on January 1, 2005. The straight line
method is used.
On January 1, 2015, the entity decided to revalue the property, plant and equipment. On such date, competent
appraisers submitted the following:
Replacement Cost
Land 5,000,000
Building 25,000,000
Machinery 5,000,000
What is the revaluation surplus on January 1, 2015? __________. What is the depreciation for the current year?
_________. What is the revaluation surplus on December 31, 2015? ___________.

Problem 3.On January 1, 2015, Reigo Company provided the following information related to the land and building:

Land 50,000,000
Building 450,000,000
Accum. Depreciation-Bldg. 75,000,000
There were no additions or disposals during 2015. Depreciation is computed using straight line over 15 years for
building. On June 30, 2015 the land and building were revalued as follows:
Replacement Cost Sound Value
Land 65,000,000 65,000,000
Building 600,000,000 480,000,000
What is the revaluation surplus on June 30, 1015? __________. What is the deprecation of the building for the current
year? __________. What is the revaluation surplus on December 31, 1015? _________.

Problem 4. On June 30, 2015, Dela Merced Company reported the following information related to equipment:

Equipment at cost 5,000,000


Accum. Depreciation 1,500,000

The equipment was measured using the cost model and depreciated on a straight line basis over a 10-year period. On
December 31, 2015, the entity decided to change the basis of measuring the equipment from the cost model to the
revaluation model. The equipment was revalued to the fair value of P4,550,000 with an expected remaining useful life of
5 years. What is the depreciation for 2015? What is the depreciation for 2016? What is the revaluation surplus on
December 31,2016? _____________.
Problem 5. On January 1, 2015, Ty Company revealed the following historical balances of land and building:
Cost Accum Depreciation
Land 50,000,000
Building 300,000,000 90,000,000
The land and building were appraised on same date and the revaluation showed the following:
Sound Value
Land 70,000,000
Building 315,000,000
There were no additions or disposals during the current year. Depreciation is computed on the straight line basis. The
estimated useful life of the building is 20 years. What is the revaluation surplus on January 1, 2015? __________. What
is the depreciation of the building for the current year?
What is the revaluation surplus on December 31, 2015? __________.

Problem 6. On January 1, 2015, Elizalde Company owned a building with historical cost of P40,000,000. The property is
depreciated over 40 years on a straight line basis with no residual value. The entity adopted the revaluation model of
measuring PPE. The building has so far been revalued twice at fair value as follows:
January 1, 2016 46,800,000
January 1,2018 55,500,000
What is the revaluation surplus on January 1, 2016? ________. What is the increase in revaluation surplus to be
recognized as component of other comprehensive income on January 1, 2018? ________.
What is the revaluation surplus to be reported in the statement of changes in equity on December 31, 2018? ________.

Problem 7. Montemayor Company purchased four convenience store buildings on January 1, 20119 for a total of
P25,000,000. The buildings have been depreciated using the straight line method with a 20-year useful life and 10&
residual value. On January 1, 2015, the entity has converted the buildings into a hotel and restaurant. The entity
estimated that the buildings have a remaining useful life of 10 years, that their residual value will be zero, that net cash
inflows from thee buildings will total P1,500,000 per year, and that the fair value less cost of disposal of the four building
totals P10,000,000. The appropriate discount rate is 12%. The present value of an ordinary annuity of 1 at 12% for 10
periods is 5.65. What is the value in use? __________. What is the impairment loss? _________. What is the
depreciation for the current year? __________.

Problem 8. On January 1, 2015, Freniere Company has a machinery with cost of P5,000,000 and accumulated
depreciation of P1,500,000. The machinery was acquired on January 1, 2012 and has been depreciated using the straight
line method with useful life of 10 years and no residual value. On January 1, 2015, the entity has properly tested the
machinery to be impaired. The machinery has a remaining useful life of 5 years and is expected to generate
undiscounted net cash flows of P800,000 per year. The fair value less cost of disposal of the machinery on January 1,
2015 is P3,000,000. The appropriate discount rate is 6%. The present value of an ordinary annuity of 1 at 6% for 5
periods is 4.21. What is the value in use? __________. What is the impairment loss? _________. What is the
depreciation for the current year? __________.

Problem 9. On January 1, 2015, Montreal Company owned a machine having a carrying amount of P2,400,000. The
machine was purchased 4 years earlier for P4,000,000. The entity used straight line depreciation. During December
2015, the entity determined that the machine suffered permanent impairment of the operational value and will not be
economically useful in the production process after December 31, 2015. The entity sold the machine for P650,000 on
January 5, 2016. In the income statement for the year ended December 31, 2015, what amount should be recognized as
impairment loss? __________.

Problem 10. On January 1, 2012, Bacasnot Company purchased a machine for P800,000 and established an annual
depreciation charge of P100,000 over an eight-year life. During 2015, after issuing the 2014 financial statements, the
entity concluded that the machine suffered permanent impairment of the operational value, and P200,000 is a
reasonable estimate of the amount expected to be recovered through use of the machine for the period January 1, 2015
through December 31, 2019. What should be reported as carrying amount of the machine on December 31, 2015?