Belle Printing Company incurred the following cost:

Purchase of collating and stapling attachment 840,000

Installation of attachment 360,000
Replacement parts for overhaul of press 260,000
Labor and overhead in connection with overhaul 140,000

The overhaul resulted in a significant increase in production. Neither the attachment nor
the overhaul increased the estimated useful life or press.
What total amount should be capitalized?
a. 1,600,000
b. 1,200,000
c. 840,000
d. 0

Depreciation of an asset begins

When it is available for use
When it is actually used
When it is retired from active use
When it is derecognized

Which of the following factors are considered in determining the useful life of an asset?
I. Expected usage of the asset.
II. Expected physical wear and tear.
III. Technical or commercial obsolescence.
IV. Legal or similar limits on the use of the asset.
I, II, III and IV
I, II, III
I, II IV
I, II

Useful life of PPE is

a. The period over which an asset is expected to be available for use by an entity.
b. The number of production or similar units expected to be obtained from the asset by an entity
Either a or b
Neither a or b.

Holdaway Inc. a small furniture manufacturer, purchased the following assets at the end of the year
Asset # Cost Residual Val. Depreciable Amt. Life
1 24,000 5,000 19,000 5
2 900 130 770 7
3 320 0 320 8
4 9,000 500 8,500 5
34,220 28,590
The group depreciation rate is
16.51
15.61
19.76
17.96

The group life is

5.06
6.06
6.25
5.25

Plantita Em Corporation acquired a machine at a total cost of P5,200,000. The estimated life of the
machine is 8 years or a total of P100,000 working hours with no salvage value. The operating hours of
the machine totaled 2017, 5,000 hours; 2018, 12,000 hours. If the company uses the working hours
method, the depreciation for 2018 is
260,000
624,000
650,000
884,000

Mama Ivy Company uses the sum of the years’ digits method to depreciate equipment purchased in
January 2016 for 20,000. The estimated residual value of the equipment is P2,000 and the estimated
useful life is 4 years. What should be the depreciation charge for the year ended Dec. 31, 2018?
6,000
5,400
4,000
3,600

K.Mata Company purchased a machine on January 2, 2015 for P500,000. The machine has an estimated
useful life of eight years and a salvage value of P50,000. Depreciation was computed by the 200%
declining-balance method. What should be the depreciation charge for the year-ended December 31,
2018?
70,313
52,734
47,461
41,870
As of January 1, 2018, Seri decided to change the method of computing the depreciation on its sole
piece of equipment from the sum-of-the-years’ digits method top straight line method. The equipment
acquired in January 2015 for P520,000 had an estimated life of five years and a salvage value of P20,000.
The amount of depreciation expense for 2018 is:
100,000
60,000
50,000
42,000

Tine Corporation has the following information on January 1, 2018 relating to land and building.
Land 20,000,000
Building 450,000,000
Accumulated Depreciation 75,000,000
There were no additions or disposals during 2018. Depreciation is computed using straight line method
over 15 years for building. On June 30, 2018, land and building were revalued as follows:
 Replacement Cost Depreciated Replacement Cost
Land 35,000,000 35,000,000
Building 600,000,000 480,000,000
The depreciation expense for the year 2018 is
35 Million
40 Million
30 Million
32 Million

The revaluation surplus as of December 31, 2018 is

135 Million
125 Million
130 Million
127 Million

Depreciation, if applicable is recognized under (Cost Model, Revaluation Model)

Yes, Yes
Yes, No
No, Yes
No, No

When an item of PPE is revalued , any accumulated depreciation at the date of revaluation is
*Restated proportionately with the change in the gross carrying amount of the asset so that the carrying
amount of the asset after revaluation equals its revalued amount
**Eliminated against the gross carrying amount of the asset and the net amount restated to the
revalued amount of the asset
Either * or **
Neither * nor **

Booster Co. Purchased a building on January 1, 2008 for P1,250,000. At acquisition, the useful life of the
building was 50 years. Depreciation is calculated on the straight line basis. On January 1, 2018 the
building was revalued at P1,600,000. Booster Co. has a policy of transferring the excess depreciation on
revaluation from the revaluation surplus to the retained earnings. Assuming no further revaluations take
place, what is the balance of the revaluation surplus on December 31, 2018?
341,250
350,000
600,000
585,000

On January 1, 2018, the historical balances of land and building of Time Company are:
Cost Accumulated Depreciation
Land 50,000,000 0
Building 300,000,000 90,000,000

The land and building were appraised on the same date and the revaluation revealed the following:
Fair Value
Land 80,000,000
 Building 350,000,000
There were no additions or disposals during 2018. Depreciation is computed on the straight line. The
estimated life of the building is 20 years. The depreciation of the building for the year ended December
31, 2018 should be
25,000,000
15,000,000
10,000,000
17,500,000

Happy Company provided the following information on January 1, 2016:

Vehicle Cost 5,000,000
Useful life in years 5
Useful life in miles 100,000
Residual Value 1,000,000
Actual Miles Driven:
2016 30,000
2017 20,000
2018 15,000
What is the depreciation for 2018 using the SYD method?
1,000,000
1,333,000
800,000
600,000

What is the accumulated depreciation on December 31, 2017 using the double declining balance
method?
1,200,000
1,600,000
2,560,000
3,200,000

What is the accumulated depreciation on December 31, 2017 using the miles driven?
2,000,000
2,600,000
800,000
600,000