• Author / Uploaded
• Excelsia Grace A. Parreño

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ADDITIONAL PROBLEMS FOR PPE – ACCT202 PROBLEM #1 Reprieve Company acquired a machinery for P500,000. The credit terms were 2/10, n/30. REQUIRED: Prepare two journal entries, one for the acquisition and the other for the subsequent payment using gross method and net method assuming: a) Payment was made within the discount period b) Payment was made beyond the discount period PROBLEM #2 Scenery Company experienced the following transactions during the current year. 1. Purchased machinery for P500,000 cash. 2. Purchased land and building for P5,500,000 cash, including an appraiser’s fee of P100,000. An appraisal indicated fair value as follows: Land 2,000,000 Building 3,000,000 3. Invested in 5,000 shares of another entity at P100 per share. Subsequently, the entity, the entity exchanged the 5,000 shares for a delivery equipment. At the time of exchange, the shares are quoted at 120 and the equipment has a list price of P680,000. Motor vehicle registration was paid in the amount of P3,000. 4. A certain equipment was donated by a shareholder to the entity. An independent appraisal of the equipment placed the fair value at P1,000,000 and the residual value at P100,000. Attorney’s fees and other legal expenses amounted to P25,000. 5. Land and building were acquired by issuing 60,000 shares of P100 par value. The share is quoted at P150 on the date of exchange, and the assets acquired had the following assessed value for tax purposes: Land 1,000,000 Building 3,000,000 REQUIRED: Prepare journal entries to record the transactions. PROBLEM #3 River Company plans to dispose of an equipment in one of several ways. Equipment – old 2,000,000 Accumulated depreciation 700,000 Fair value 1,500,000 1. The equipment is exchanged for a vacant lot whose fair value is P1,700,000. 2. The equipment is exchanged for a used equipment also valued at P1,500,000. The cash flows of the asset given and the cash flows of the asset received do not differ. 3. The equipment is exchanged for a used equipment valued at P2,000,000. River company pays P500,000 in the exchange. REQUIRED: Prepare journal entry to record the independent exchange transactions. PROBLEM #4 Sensational Company replaced a portion of a building for P2,500,000. Before the replacement, the building and accumulated depreciation accounts were: Building (original life, 25 years) 9,000,000 Accumulated depreciation (5 years expired) 1,800,000 REQUIRED: Prepare the journal entry to record the replacement and subsequent annual depreciation under each of the following assumptions: 1. The portion of the building being replaced had an original cost of P2,000,000. 2. Separate identification of the replaced part is not practicable. The appropriate discount rate is 5%. The present value of 1 at 5% for 5 periods is 0.784.