n the erly ntity's before m and sed to If not, Chapter 5 - Property, Plant...
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n the erly ntity's before m and sed to If not, Chapter 5 - Property, Plant and Equipment - Cost Model 5-43 E 5-3- Acquisitions of PPE The following pertains to an entity's acquisitions of PPE during the year: (a) Purchased a new printing machine on Dec. 2 at an invoice price of P4,000,000 with terms 2/10, n/30. On Dec. 15, the entity paid the required amount for the machine. (b) Acquired an equipment by issuing P800,000, five-year 6% note. The entity's incremental borrowing rate is 14%. The annual payment of principal and interest on the note is to be P189,930. The asset has a cash price of P651,460. (c) Acquired a machine on Dec. 30 by issuing noninterest bearing note requiring three payments of P1,000,000. The first payment was made on the date of purchase, and the others are due annually on Dec. 30. The prevailing rate of interest for this type of note at date of issuance was 12%. The present value of an ordinary annuity of 1 at 12% is 1.69 for two periods and 2.40 for three periods. (d) The entity has a machine with a carrying amount of P450,000. Another entity has a delivery vehicle with a carrying amount of P300,000. The entities exchanged the machine and vehicle, and the other entity paid an additional P90,000 cash as part of the exchange. Assume that the fair value of the delivery vehicle is P420,000. The exchange has commercial substance. (e) A used delivery truck was traded in for a new truck. Information relating to the trucks follows: Used truck: Cost P1,600,000 1,200,000 Accumulated depreciation New truck: List price 2,000,000 1,900,000 Cash price without trade-in 1,560,000 Cash price with trade-in (f) Received land from a non-owner to facilitate the construction of a plant. The entity paid P100,000 for the land transfer. The land's fair value is P1,500,000. Required: Prepare the journal entry to record each acquisition. n the erly ntity's before m and sed to If not, Chapter 5 - Property, Plant and Equipment - Cost Model 5-43 E 5-3- Acquisitions of PPE The following pertains to an entity's acquisitions of PPE during the year: (a) Purchased a new printing machine on Dec. 2 at an invoice price of P4,000,000 with terms 2/10, n/30. On Dec. 15, the entity paid the required amount for the machine. (b) Acquired an equipment by issuing P800,000, five-year 6% note. The entity's incremental borrowing rate is 14%. The annual payment of principal and interest on the note is to be P189,930. The asset has a cash price of P651,460. (c) Acquired a machine on Dec. 30 by issuing noninterest bearing note requiring three payments of P1,000,000. The first payment was made on the date of purchase, and the others are due annually on Dec. 30. The prevailing rate of interest for this type of note at date of issuance was 12%. The present value of an ordinary annuity of 1 at 12% is 1.69 for two periods and 2.40 for three periods. (d) The entity has a machine with a carrying amount of P450,000. Another entity has a delivery vehicle with a carrying amount of P300,000. The entities exchanged the machine and vehicle, and the other entity paid an additional P90,000 cash as part of the exchange. Assume that the fair value of the delivery vehicle is P420,000. The exchange has commercial substance. (e) A used delivery truck was traded in for a new truck. Information relating to the trucks follows: Used truck: Cost P1,600,000 1,200,000 Accumulated depreciation New truck: List price 2,000,000 1,900,000 Cash price without trade-in 1,560,000 Cash price with trade-in (f) Received land from a non-owner to facilitate the construction of a plant. The entity paid P100,000 for the land transfer. The land's fair value is P1,500,000. Required: Prepare the journal entry to record each acquisition.
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Fundamentals of Cost Accounting
ISBN: 978-0077398194
3rd Edition
Authors: William Lanen, Shannon Anderson, Michael Maher
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