QUESTIONS: What is the correct carrying value of the building as of December 31, 2020? Provided that
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QUESTIONS:
- What is the correct carrying value of the building as of December 31, 2020?
- Provided that the nominal accounts have already been closed by the end of 2020, the December 31, 2020 retained earnings is overstated(understated) by?
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Welders Corporation engaged you for the first time to audit their financial statements as of and for the period ended December 31, 2020. In auditing their PPE, you were able to obtain the balance of their Building account. One of the items under the building account has a cost of P50,000,000, and a related accumulated depreciation of P7,500,000. Based from your investigation, you were able to gather the following information: • Welders decided to construct a new building for their operations, and started the construction on January 2, 2017. The entity finished the construction on December 30, 2017, and occupied the building on January 1, 2018. • Before the construction, the entity obtained a loan on January 1, 2017 specifically to finance the construction of the building. The face value of the loan is P20,000,000, with an interest rate of 10%. The loan is due on December 31, 2021. • On December 31, 2016, the entity had outstanding loans for general purposes. The loans are as follows: o A P30,000,000 loan from PI Bank; 11% interest rate; maturity date is December 31, 2020 o P15,000,000 loan from PN Bank; 8.5% interest rate; maturity date is December 31, 2023 • The schedule of payments made by the entity during the construction are as follows: ✓ January 2 ✓ March 31 9,000,000 8,700,000 ✓ June 30 ✓ July 31 ✓ December 31 • The building has no residual value Note: Round-off any rates to two decimal places (xx.xx%) 4,300,000 24,000,000 4,000,000 Welders Corporation engaged you for the first time to audit their financial statements as of and for the period ended December 31, 2020. In auditing their PPE, you were able to obtain the balance of their Building account. One of the items under the building account has a cost of P50,000,000, and a related accumulated depreciation of P7,500,000. Based from your investigation, you were able to gather the following information: • Welders decided to construct a new building for their operations, and started the construction on January 2, 2017. The entity finished the construction on December 30, 2017, and occupied the building on January 1, 2018. • Before the construction, the entity obtained a loan on January 1, 2017 specifically to finance the construction of the building. The face value of the loan is P20,000,000, with an interest rate of 10%. The loan is due on December 31, 2021. • On December 31, 2016, the entity had outstanding loans for general purposes. The loans are as follows: o A P30,000,000 loan from PI Bank; 11% interest rate; maturity date is December 31, 2020 o P15,000,000 loan from PN Bank; 8.5% interest rate; maturity date is December 31, 2023 • The schedule of payments made by the entity during the construction are as follows: ✓ January 2 ✓ March 31 9,000,000 8,700,000 ✓ June 30 ✓ July 31 ✓ December 31 • The building has no residual value Note: Round-off any rates to two decimal places (xx.xx%) 4,300,000 24,000,000 4,000,000 Welders Corporation engaged you for the first time to audit their financial statements as of and for the period ended December 31, 2020. In auditing their PPE, you were able to obtain the balance of their Building account. One of the items under the building account has a cost of P50,000,000, and a related accumulated depreciation of P7,500,000. Based from your investigation, you were able to gather the following information: • Welders decided to construct a new building for their operations, and started the construction on January 2, 2017. The entity finished the construction on December 30, 2017, and occupied the building on January 1, 2018. • Before the construction, the entity obtained a loan on January 1, 2017 specifically to finance the construction of the building. The face value of the loan is P20,000,000, with an interest rate of 10%. The loan is due on December 31, 2021. • On December 31, 2016, the entity had outstanding loans for general purposes. The loans are as follows: o A P30,000,000 loan from PI Bank; 11% interest rate; maturity date is December 31, 2020 o P15,000,000 loan from PN Bank; 8.5% interest rate; maturity date is December 31, 2023 • The schedule of payments made by the entity during the construction are as follows: ✓ January 2 ✓ March 31 9,000,000 8,700,000 ✓ June 30 ✓ July 31 ✓ December 31 • The building has no residual value Note: Round-off any rates to two decimal places (xx.xx%) 4,300,000 24,000,000 4,000,000 Welders Corporation engaged you for the first time to audit their financial statements as of and for the period ended December 31, 2020. In auditing their PPE, you were able to obtain the balance of their Building account. One of the items under the building account has a cost of P50,000,000, and a related accumulated depreciation of P7,500,000. Based from your investigation, you were able to gather the following information: • Welders decided to construct a new building for their operations, and started the construction on January 2, 2017. The entity finished the construction on December 30, 2017, and occupied the building on January 1, 2018. • Before the construction, the entity obtained a loan on January 1, 2017 specifically to finance the construction of the building. The face value of the loan is P20,000,000, with an interest rate of 10%. The loan is due on December 31, 2021. • On December 31, 2016, the entity had outstanding loans for general purposes. The loans are as follows: o A P30,000,000 loan from PI Bank; 11% interest rate; maturity date is December 31, 2020 o P15,000,000 loan from PN Bank; 8.5% interest rate; maturity date is December 31, 2023 • The schedule of payments made by the entity during the construction are as follows: ✓ January 2 ✓ March 31 9,000,000 8,700,000 ✓ June 30 ✓ July 31 ✓ December 31 • The building has no residual value Note: Round-off any rates to two decimal places (xx.xx%) 4,300,000 24,000,000 4,000,000 Welders Corporation engaged you for the first time to audit their financial statements as of and for the period ended December 31, 2020. In auditing their PPE, you were able to obtain the balance of their Building account. One of the items under the building account has a cost of P50,000,000, and a related accumulated depreciation of P7,500,000. Based from your investigation, you were able to gather the following information: • Welders decided to construct a new building for their operations, and started the construction on January 2, 2017. The entity finished the construction on December 30, 2017, and occupied the building on January 1, 2018. • Before the construction, the entity obtained a loan on January 1, 2017 specifically to finance the construction of the building. The face value of the loan is P20,000,000, with an interest rate of 10%. The loan is due on December 31, 2021. • On December 31, 2016, the entity had outstanding loans for general purposes. The loans are as follows: o A P30,000,000 loan from PI Bank; 11% interest rate; maturity date is December 31, 2020 o P15,000,000 loan from PN Bank; 8.5% interest rate; maturity date is December 31, 2023 • The schedule of payments made by the entity during the construction are as follows: ✓ January 2 ✓ March 31 9,000,000 8,700,000 ✓ June 30 ✓ July 31 ✓ December 31 • The building has no residual value Note: Round-off any rates to two decimal places (xx.xx%) 4,300,000 24,000,000 4,000,000 Welders Corporation engaged you for the first time to audit their financial statements as of and for the period ended December 31, 2020. In auditing their PPE, you were able to obtain the balance of their Building account. One of the items under the building account has a cost of P50,000,000, and a related accumulated depreciation of P7,500,000. Based from your investigation, you were able to gather the following information: • Welders decided to construct a new building for their operations, and started the construction on January 2, 2017. The entity finished the construction on December 30, 2017, and occupied the building on January 1, 2018. • Before the construction, the entity obtained a loan on January 1, 2017 specifically to finance the construction of the building. The face value of the loan is P20,000,000, with an interest rate of 10%. The loan is due on December 31, 2021. • On December 31, 2016, the entity had outstanding loans for general purposes. The loans are as follows: o A P30,000,000 loan from PI Bank; 11% interest rate; maturity date is December 31, 2020 o P15,000,000 loan from PN Bank; 8.5% interest rate; maturity date is December 31, 2023 • The schedule of payments made by the entity during the construction are as follows: ✓ January 2 ✓ March 31 9,000,000 8,700,000 ✓ June 30 ✓ July 31 ✓ December 31 • The building has no residual value Note: Round-off any rates to two decimal places (xx.xx%) 4,300,000 24,000,000 4,000,000 Welders Corporation engaged you for the first time to audit their financial statements as of and for the period ended December 31, 2020. In auditing their PPE, you were able to obtain the balance of their Building account. One of the items under the building account has a cost of P50,000,000, and a related accumulated depreciation of P7,500,000. Based from your investigation, you were able to gather the following information: • Welders decided to construct a new building for their operations, and started the construction on January 2, 2017. The entity finished the construction on December 30, 2017, and occupied the building on January 1, 2018. • Before the construction, the entity obtained a loan on January 1, 2017 specifically to finance the construction of the building. The face value of the loan is P20,000,000, with an interest rate of 10%. The loan is due on December 31, 2021. • On December 31, 2016, the entity had outstanding loans for general purposes. The loans are as follows: o A P30,000,000 loan from PI Bank; 11% interest rate; maturity date is December 31, 2020 o P15,000,000 loan from PN Bank; 8.5% interest rate; maturity date is December 31, 2023 • The schedule of payments made by the entity during the construction are as follows: ✓ January 2 ✓ March 31 9,000,000 8,700,000 ✓ June 30 ✓ July 31 ✓ December 31 • The building has no residual value Note: Round-off any rates to two decimal places (xx.xx%) 4,300,000 24,000,000 4,000,000 Welders Corporation engaged you for the first time to audit their financial statements as of and for the period ended December 31, 2020. In auditing their PPE, you were able to obtain the balance of their Building account. One of the items under the building account has a cost of P50,000,000, and a related accumulated depreciation of P7,500,000. Based from your investigation, you were able to gather the following information: • Welders decided to construct a new building for their operations, and started the construction on January 2, 2017. The entity finished the construction on December 30, 2017, and occupied the building on January 1, 2018. • Before the construction, the entity obtained a loan on January 1, 2017 specifically to finance the construction of the building. The face value of the loan is P20,000,000, with an interest rate of 10%. The loan is due on December 31, 2021. • On December 31, 2016, the entity had outstanding loans for general purposes. The loans are as follows: o A P30,000,000 loan from PI Bank; 11% interest rate; maturity date is December 31, 2020 o P15,000,000 loan from PN Bank; 8.5% interest rate; maturity date is December 31, 2023 • The schedule of payments made by the entity during the construction are as follows: ✓ January 2 ✓ March 31 9,000,000 8,700,000 ✓ June 30 ✓ July 31 ✓ December 31 • The building has no residual value Note: Round-off any rates to two decimal places (xx.xx%) 4,300,000 24,000,000 4,000,000 Welders Corporation engaged you for the first time to audit their financial statements as of and for the period ended December 31, 2020. In auditing their PPE, you were able to obtain the balance of their Building account. One of the items under the building account has a cost of P50,000,000, and a related accumulated depreciation of P7,500,000. Based from your investigation, you were able to gather the following information: • Welders decided to construct a new building for their operations, and started the construction on January 2, 2017. The entity finished the construction on December 30, 2017, and occupied the building on January 1, 2018. • Before the construction, the entity obtained a loan on January 1, 2017 specifically to finance the construction of the building. The face value of the loan is P20,000,000, with an interest rate of 10%. The loan is due on December 31, 2021. • On December 31, 2016, the entity had outstanding loans for general purposes. The loans are as follows: o A P30,000,000 loan from PI Bank; 11% interest rate; maturity date is December 31, 2020 o P15,000,000 loan from PN Bank; 8.5% interest rate; maturity date is December 31, 2023 • The schedule of payments made by the entity during the construction are as follows: ✓ January 2 ✓ March 31 9,000,000 8,700,000 ✓ June 30 ✓ July 31 ✓ December 31 • The building has no residual value Note: Round-off any rates to two decimal places (xx.xx%) 4,300,000 24,000,000 4,000,000 Welders Corporation engaged you for the first time to audit their financial statements as of and for the period ended December 31, 2020. In auditing their PPE, you were able to obtain the balance of their Building account. One of the items under the building account has a cost of P50,000,000, and a related accumulated depreciation of P7,500,000. Based from your investigation, you were able to gather the following information: • Welders decided to construct a new building for their operations, and started the construction on January 2, 2017. The entity finished the construction on December 30, 2017, and occupied the building on January 1, 2018. • Before the construction, the entity obtained a loan on January 1, 2017 specifically to finance the construction of the building. The face value of the loan is P20,000,000, with an interest rate of 10%. The loan is due on December 31, 2021. • On December 31, 2016, the entity had outstanding loans for general purposes. The loans are as follows: o A P30,000,000 loan from PI Bank; 11% interest rate; maturity date is December 31, 2020 o P15,000,000 loan from PN Bank; 8.5% interest rate; maturity date is December 31, 2023 • The schedule of payments made by the entity during the construction are as follows: ✓ January 2 ✓ March 31 9,000,000 8,700,000 ✓ June 30 ✓ July 31 ✓ December 31 • The building has no residual value Note: Round-off any rates to two decimal places (xx.xx%) 4,300,000 24,000,000 4,000,000
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Related Book For
Financial Accounting an introduction to concepts, methods and uses
ISBN: 978-0324789003
13th Edition
Authors: Clyde P. Stickney, Roman L. Weil, Katherine Schipper, Jennifer Francis
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