Two units 1.0mVA capacity diesel engine generator set were purchased six years ago at a cost of
Question:
Two units 1.0mVA capacity diesel engine generator set were purchased six years ago at a cost of P7,000,000. It was estimated to have a useful life of 10 years with a salvage value of P300,000 at the end of life. Due to the unusual operational problem, the company decided to replace the units and can be sold only for P800,000 per unit. Determine the sunk cost of the two units if depreciation has been computed by:
1.) Straight-line method
a. P1,380,000 b. P1,450,000 c. P1,350,000 d. P1,507,000
2.) Sinking fund method at 12% interest rate
a. P2,125,500 b. P 3,109,237 c. P2,634,210 d. P3,541,023
3.) Double declining balance method
a. P253,800 b. P235,008 c. P325,080 d. P358,200
4.)Sum-of-the-year’s digit method
a. P11,118 b. P18,181 c. P88,118 d. P81,818
Expert Answer:
1 Straightline method The sunk cost of the two units under the straightline method is P1350000 2 Sin... View the full answer
