You were engaged to audit AAA Company's financial statements for the year 2019. In the course...

 

Transcribed Image Text:

You were engaged to audit AAA Company's financial statements for the year 2019. In the course of your audit, you noted that some parts of your client's company building were replaced during 2019. The outside corrugated covering of the factory wall was removed and replaced. The job was done by a reputable construction firm and will extend the life of the building by four years. The cost of the new wall was P189,000. The cost of the old wall was determined to be 150,000. The building is 25% depreciated. Dust filters installed in the interior of the factory were replaced at a cost of P90,000. Management believes that the new filters will result health hazards and thus reduce employee benefit costs. The management has no record of the cost of the original filters. It can be purchased however, in the market at P60,000. The useful life of the filter is 6 years and is 50% depreciated. Discount rate is 8%. How much is the total capital expenditures incurred? How much is the total loss incurred from the replacements made? You were engaged to audit AAA Company's financial statements for the year 2019. In the course of your audit, you noted that some parts of your client's company building were replaced during 2019. The outside corrugated covering of the factory wall was removed and replaced. The job was done by a reputable construction firm and will extend the life of the building by four years. The cost of the new wall was P189,000. The cost of the old wall was determined to be 150,000. The building is 25% depreciated. Dust filters installed in the interior of the factory were replaced at a cost of P90,000. Management believes that the new filters will result health hazards and thus reduce employee benefit costs. The management has no record of the cost of the original filters. It can be purchased however, in the market at P60,000. The useful life of the filter is 6 years and is 50% depreciated. Discount rate is 8%. How much is the total capital expenditures incurred? How much is the total loss incurred from the replacements made?

Answer rating: 100% (QA)

To calculate the total capital expenditures incurred and the total loss incurred from the replacemen... View the full answer