EX PROBLEM 1

Cost Residual Value Dapriciable Amount Useful life

Building 6,100,000 100,000 6,000,000 20
Machinery 2,550,000 50,000 2,500,000 5
Equipment 1,030,000 30,000 1,000,000 10
9,680,000 180,000 9,500,000

a) Composite rate = 9.29%

b) Composite life = 10.5 yrs
c) Depreciation 900,000
Accumulated Depreciation 900,000
d) Cash 40,000
Accumulated Depreciation 2,510,000
Machinery 2,550,000
e) Depreciation 662,377
Accumulated Deprecaition 662,377
9680000 - 2,550,000 = 7,130,000 * 9.29% = 662,377

EX PROBLEM 2

EX. PROBLEM 1

SYD COST 1,200,000

RESIDUAL VALUE 120,000 SYD= 8 (8+1/2)
EST. USEFUL LIFE 8 yrs = 36

Year Particular Depreciation Accum Dep'n

acquisition cost
2020 8/36 x 1,080,000 240,000 240,000
2021 7/36 x 1,080,000 210,000 450,000
2023 6/36 x 1,080,000 180,000 630,000
2024 5/36 x 1,080,000 150,000 780,000
2025 4/36 x 1,080,000 120,000 900,000
2026 3/36 x 1,080,000 90,000 990,000
2027 2/36 x 1,080,000 60,000 1,050,000
2028 1/36 x 1,080,000 30,000 1,080,000
1,080,000

DDB
 COST 1,200,000
RESIDUAL VALUE 120,000
EST. USEFUL LIFE 8 yrs
SL RATE 12.50%
DD RATE 25%

Year Particular Depreciation Accum Dep'n

2020 25% x 1,200,000 300,000 300,000

2021 25% x 900,000 225,000 525,000
2022 25% x 675,000 168,750 693,750
2023 25% x 126,563 31,641 725,391
2024 25% x 474,609 118,652 844,043
2025 25% x 355,957 88,989.0 933,032
2026 25% x 266,968 66,742 999,774
2027 25% x 200,226 50,057 1,049,831
2028 150,169-120,000 30,169 1,080,000
1,080,000

EX. PROBLEM 2

COST 960,000
DATE OF ACQUISITION Oct. 1, 2020
RESIDUAL VALUE 60,000 (70-10)
EST. USEFUL LIFE 4 1/2
SYD 45

DATE
Oct1-Dec31 2020 9/45x900,000 180,000
Jan1-Sept31 2021 8/45x900,000 160,000
Oct1-Dec31 7/45x900,000 140,000
Jan1-Sept31 2022 6/45x900,000 120,000
Oct1-Dec31 5/45x900,000 100,000
Jan1-Sept31 2023 4/45x900,000 80,000
Oct1-Dec31 3/45x900,000 60,000
Jan1-Sept31 2024 2/45x900,000 40,000
Oct1-Dec31 1/45x900,000 20,000
900,000
Annual Depreciation
300,000
500,000
100,000
900,000

Carrying Amount
1,200,000
960,000
750,000
570,000
420,000
300,000
210,000
150,000
120,000
 Carrying Amount
1,200,000
900,000
675,000
506,250
474,609
355,957
266,968
200,226
150,169
120,000

DEP
90,000

390,000
EXERCISE PROBLEM 1

1. STRAIGHT LINE

MACHINERY 570,000.00
RESIDUAL VALUE 20,000.00
USEFUL LIFE 10 YRS
DATE OF ACQUISITION July 1, 2020

YEAR DEPRECIATION ACCUM. DEP CA

acq. cost 570,000
2020 55,000 55,000 515,000 27500
2021 55,000 110,000 460,000
2022 55,000 165,000 405,000
2023 55,000 220,000 350,000
2024 55,000 275,000 295,000
2025 55,000 330,000 240,000
2026 55,000 385,000 185,000
2027 55,000 440,000 130,000
2028 55,000 495,000 75,000
2029 55,000 550,000 20,000
550,000

2. WORKING HOURS
DEPRCIATION TABLE- WO
MACHINERY 570,000.00
RESIDUAL VALUE 20,000.00 YEAR
EST. USEFUL LIFE:
YEARS 10 YRS 2020
SERVICE HOURS 50,000 hours 2021
OUTPUT 200,000 units

ACTUAL OPERATIONS
YEAR SERV. HRS OUTPUT
2020 3,000 18,000
2021 5,000 22,000
8,000 40,000

RATE:
WORKING 11/HR
OUTPUT 2.75/U
 3. OUTPUT METHOD

DEPRCIATION TABLE- OUTPUT/PRODUCT METHOD

YEAR PARTICULAR DEPRECIATION ACCUM. DEP'N CA

acq.cost 570,000
2020 2.75x 18,000 49,500 49,500 520,500
2021 2.75x 22,000 60,500 110,000 460,000

EXERCISE PROBLEM 2

Journal Entries

To rec. the acquisition, March 31

Tools 40,000
Cash 40,000
To rec. the acquisition, July 31
Tools 20,000
Cash 20,000
To rec. the sale of used tools at residual value, Dec 31
Cash 4,000
Tools 4,000
To record the depreciation
Depreciation 46,000
Tools 46,000

Bal. of tools account 196,000

less: Inventory end 150,000
Depreciation 46,000

EXERCISE PROBLEM 3

2020 Tools, Jan 1 (800 @ P200) 160,000

Acquisition at cost (400@300) 120,000
Retirement of tools (300@50) 15,000
Est. value of tools at year end 200,000

JOURNAL ENTRIES

RETIREMENT To record acquisition

Tools (400@300) 120,000
Cash 120,000
 To record the retirement
Cash (300@50) 15,000
Depreciation 45,000
Tools 60,000

Cost of tools retired (FIFO) :

300 x 200 60,000
300 units = 60,000

REPLACEMENT To record the acquisition in excess of the retirement. (400 - 300 = 100 units)
Tools (100x300) 30,000
Cash 30,000

To record the replacement of the tools retired

Depreciation 75,000
Cash 75,000

Replacement cost of tools retired (300x300) 90,000

Proceeds from retirement (15,000)
Depreciation 75,000

INVENTORY To record acquisition

Tools 120,000
Cash 120,000

To record depreciation of tools

Depreciation 80,000
Tools 80,000

Balance of tools account 280,000

Inventory of tools - Dec. 31 (200,000)
Depreciation 80,000

2021 Tools, Jan 1 (500@200) (400@300) 240,000

Acquisition at cost (900@400) 360,000
Retirement of tools (700@70) 49,000
Est. value of tools at year end 300,000

RETIREMENT To record acquisition

Tools (900@400) 360,000
Cash 360,000
 To record the retirement
Cash (700@70) 49,000
Depreciation 111,000
Tools 160,000

Cost of tools retired (FIFO) :

500x200 = 100,000
200x300 = 60,000
700 units = 160,000

REPLACEMENT To record the acquisition in excess of the retirement. (900 - 700 = 200 units)
Tools (200@400) 80,000
Cash 80,000

To record the replacement of the tools retired

Depreciation 231,000
Cash 231,000

Replacement cost of tools retired (700x400) 280,000

Proceeds from retirement (49,000)
Depreciation 231,000

INVENTORY To record acquisition

Tools (900x400) 360,000
Cash 360,000

To record depreciation of tools

Depreciation 300,000
Tools 300,000

Balance of tools account 560,000

Inventory of tools - Dec. 31 (350,000)
Depreciation 210,000
EPRCIATION TABLE- WORKING HOURS METHOD

PARTICULAR DEPRECIATION ACCUM. DEP'N CA

acq. cost 570,000
11x 3,000 33,000 33,000 537,000
11x 5,000 55,000 88,000 482,000
EXERCISE 1

2020 Depletion rate per unit= 960,000

2,400,000
= 0.4

Depletion= 1,000,000x0.40
= 400,000

Resource deposit, at cost 960,000

Accumulated depletion (400,000)
Carrying amount 560,000

2021 Original cost of wasting asset 960,000

Add. Development cost 490,000
Total 1,450,000
Accumulated depletion (400,000)
Remaining depletable amount 1,050,000

Total estimate 2,400,000

Extracted in 2020 1,000,000
Remaining estimate 1,400,000

New depletion rate per unit= 1,050,000

1,400,000
= 0.75

Depletion= 600,000x0.75
= 450,000

2022 Original cost of wasting asset 1,450,000

Add. Development cost 500,000
Total 1,950,000
Accumulated depletion (400,000 + 450,000)
Remaining depletable amount 1,100,000

New depletion rate per unit= 1,100,000

2,500,000
= 0.44

Depletion= 700,000x0.44
= 308,000
EXERCISE 2
2020 Cost 3,960,000
RV 120,000
Depletable amount 3,840,000

Depletion rate per unit= 3,840,000

120,000
= 32

Depletion= 12,000x32
= 384,000

2021 Depletable amount on 2020 3,840,000

Accumulated depletion 384,000
Remaining depletable amount 3,456,000

Total estimate 120,000

Extracted in 2020 12,000
Remaining estimate 108,000

New depletion rate per unit= 3,456,000

108,000
= 32

Depletion= 25,000x32
= 800,000
EXERCISE 1

COST REPLACEMENT COST APPRECIATION

Machinery 4,500,000 7,200,000 2,700,000
Accumulated Depreciation 900,000 1,440,000 540,000
CA/DRC/REV.SURPLUS 3,600,000 5,760,000 2,160,000

Age: 3 yrs
1 Useful life: 15
*asset is 20% depreciated

2 To record the revaluation

Machinery 2,700,000
Accumulated depreciaiton 540,000
Revalution suplus 2,160,000
3 To record the depreciation subsequent to revaluation

Depreciation 480,000
Accumulated depreciaiton 480,000
4 To record the piecemeal realization of the revaluation
surplus

Revaluaiton Surplus 180,000

Retained Earnings 180,000

EXERCISE 2

COST REPLACEMENT COST APPRECIATION

Equipment 3,000,000 4,800,000 1,800,000
Accum. Depreciation 750,000 1,200,000 450,000
CA/DRC/REV.SURPLUS 2,250,000 3,600,000 1,350,000

Age: 5 yrs
1 Useful life: 20
*asset is 25% depreciated

2 To record the revaluation

Equipment 1,800,000
Accumulated depreciaiton 450,000
Revalution suplus 1,350,000
3 To record the depreciation subsequent to revaluation
 Depreciation 240,000
Accumulated depreciaiton 240,000

4 To record the piecemeal realization of the revaluation

surplus

Revaluaiton Surplus 90,000

Retained Earnings 90,000

EXERCISE 3

COST REPLACEMENT COST APPRECIATION

Equipment 6,500,000 9,200,000 2,700,000
Residual Value 200,000 200,000 -
Depreciable amount 6,300,000 9,000,000 2,700,000
Accumulated Depreciation 1,000,000 1,500,000 500,000
Remaining depreciable amount 5,300,000 7,500,000 2,200,000

Age: 2 yrs
Useful life: 12 yrs

1 Equipment 2,700,000
Accum. Depreciation 500,000
Revaluation surplus 2,200,000

Depreciation 750,000
Accum. Depreciation 750,000

Revaluation Surplus 220,000

Retained Earnings 220,000

2 Cash 8,000,000
Accumulated Depreciation 2,250,000
Equipment 9,200,000
Gain on sale of eqpt 1,050,000

Revaluation Surplus 1,980,000

Retained Earnings 1,980,000
CP
100%
20%
80%

CP
100%
25%
75%