1. At December 31, 2021, M COMPANY's noncurrent operating asset and accumulated depreciation accounts had balances as follows:

                                                                Cost of Asset         Accumulated Depreciation

Land                                                              P 130,000

Buildings                                                       1,200,000                             P 265,400

Machinery and equipment                            775,000                                196,200

Automobiles and trucks                                132,000                                  86,200

            Leasehold improvements                221,000                                 110,500

                                                                  Depreciation Method                     Useful Life

            Land improvements                     Straight line                                          12 years

            Buildings                                      150% declining balance                       25 years

            Machinery and equipment           Straight line                                          10 years

            Automobiles and trucks               150% declining balance                         5 years

            Leasehold improvements            Straight line                                            8 years

     

Depreciation is computed to the nearest month. The salvage values of the depreciable assets are immaterial.

Transactions during 2022 and other information are as follows:

1. On January 6, 2022, a plant facility consisting of land a building was acquired from A Corp. for P600,000. Of this amount, 20% was allocated to land.

2. On April 6, 2022, new parking lots, streets, and sidewalks at the acquired plant facility were completed at a total cost of P192,000. These expenditures had an estimated useful life of 12 years

3. The leasehold improvements were completed on December 31, 2008, and had an estimated useful life of 8 years. The related lease, which would have terminated on December 31, 2014, was renewable for an additional 4-year term. On April 29, 2022, M exercised the renewal option.

4. On July 1, 2022, machinery and equipment were purchased at a total invoice cost of P250,000. Additional costs of P10,000 for delivery and P30,000 for installation were incurred.

 

5. On August 30, 2022, M purchased a new automobile for P15,000.

 

6. On September 30, 2022, a truck with a cost of P24,000 and a carrying amount of P8,100 on the date of sale was sold for P11,500. Depreciation for the 9 months ended September 30, 2022, was P2,352.

 

7. On December 20, 2022, a machine with a cost of P17,000 and a carrying amount of P2,975 at the date of disposition was scrapped without cash recovery.

 

Requirements:

1. Prepare the journal entries for 2022.
2. What is the depreciation expense on land improvements for 2022?
3. What is the depreciation expense on building for 2022?
4. What is the depreciation on automobiles and trucks for 2022?
5. What is the depreciation expense on leasehold improvements for 2022?
6. What is the depreciation expense on machinery and equipment for 2022?
7. What is the total depreciation expense for 2022?
8. What is the book value of the PPE items on December 31, 2022?

Answer rating: 100% (QA)

a Journal entries for 2022 January 6 2022 Land Dr 120000 Building Dr 480000 To Cash Cr 600000 Being land and building acquired April 6 2022 Land improvements Dr 192000 To Cash Cr 192000 Being new park... View the full answer