Property, Plant and Equipment (Part 2) Answer and Solution Of TasksAssessment Task 7.1 (Bazley et al., 2010)1. Reveille, Inc., purchased Machine #204 on April 2021, and placed the machine intoproduction on April 3, 2021. The following information is relevant to Machine #204:PriceP60,000Freight-in costs2,500Preparation and installation costs3,900Labor costs during regular production operation10,200Credit terms2/10, n/30Total productive output138.500 unitsThe company expects that the machine could beused for 10 years, after which the savagevalue would be zero. However, Reveille, Inc., intends to use the machine only eight years,after which it expects to be able to sell it for P9,800. The invoice for Machine #204 was paidApril 10, 2021. The number of units produced in 2021 and 2022 were 23,200 and 29,000,respectively. Reveile computes depreciation to the nearest whole month..RequiredCompute the depreciation for the years indicated, using the following methods (round youranswer to the nearest peso):1. 2021: Units of productions2.2022: Sum-of-the-years'- digits method2. The Nickle Company purchased an as set for P17,000 on January 2, 2021. The asset hasan expected residual value P1,000. The depreciation expense for 2021 and 2022 is shownnext for three altemative depreciation methods:YearMethod AMethod BMethod C2021P4,000P6,400P6,37520224,0004,8003,984Required1. Which depreciation method is the company using in each example?2. Compute the depreciation expense for 2023 and 2024 under each method3. On January 1, 2021 the Emming Corpontion purchased some machinery. The machineryhas an estimated life of 10 years and an estimated residual value of P5, 000. The depreciationon this machinery was P20,000 in 2023.RequiredCompute the acquisition cost of the equipment under the following depreciation methods:1. Straight-line2. Sum-of-the-years'-digits3. Double-declining-balance4. The Loban Company purchased four cars for P 9,000 each, and expects that they wouldbe sold in three years for P1,500 each. The company uses group depreciation on a straight-Ine basis.Required1. Prepare joumal entries to record the acquisition and the first year's depreciation.2. If one of the cars is sold at the beginning of the second year for P 7,000, what journalentry is required?5. The Wilcox Company acquires four machines that have the following characteristics:Estimated Service Life6 yearsMachineCostEstimated Residual ValueAP26,000P2,000B19,0001,000930,0005,0005D28,000Required1. Prepare joumal entries to record the acquisition and the first year's depreciation,assuming that the composite method is used on a straight-ine basis.2 If the company sells machine B after four years for P 10,000 prepare the journal entry. O TasksAssessment Task 7.1 (Bazley et al., 2010)1. Reveille, Inc., purchased Machine #204 on April 2021, and placed the machine intoproduction on April 3, 2021. The following information is relevant to Machine #204:PriceP60,000Freight-in costs2,500Preparation and installation costs3,900Labor costs during regular production operation10,200Credit terms2/10, n/30Total productive output138,500 unitsThe company expects that the machine could beused for 10 years, after which the savagevalue would be zero. However, Reveille, Inc., intends to use the machine only eight years,after which it expects to be able to sell it for P9,800. The invoice for Machine #204 was paidApril 10, 2021. The number of units produced in 2021 and 2022 were 23,200 and 29,000,respectively. Reveile computes depreciation to the nearest whole month..RequiredCompute the depreciation for the years indicated, using the following methods (round youranswer to the nearest peso):1. 2021: Units of productions2.2022: Sum-of-the-years'- digits method2. The Nickle Company purchased an as set for P17,000 on January 2, 2021. The asset hasan expected residual value P1,000. The depreciation expense for 2021 and 2022 is shownnext for three altemative depreciation methods:YearMethod AMethod BMethod C2021P4,000P6,400P6,37520224,0004,8003,984Required1. Which depreciation method is the company using in each example?2. Compute the depreciation expense for 2023 and 2024 under each method3. On January 1, 2021 the Emming Corpoation purchased some machinery. The machineryhas an estimated life of 10 years and an estimated residual value of P5, 000. The depreciationon this machinery was P20,000 in 2023.RequiredCompute the acquisition cost of the equipment under the following depreciation methods:1. Straight-ine2. Sum-of-the-years'-digits3. Double-declining-balance4. The Loban Company purchased four cars for P 9,000 each, and expects that they wouldbe sold in three years for P1,500 each. The company uses group depreciation on a straight-Ine basis.Required1. Prepare joumal entries to record the acquisition and the first year's depreciation.2. If one of the cars is sold at the beginning of the second year for P 7,000, what journalentry is required?5. The Wilcox Company acquires four machines that have the following characteristics:Estimated Service Life6 yearsMachineCostEstimated Residual ValueAP26,000P2,000B19,0001,000930,0005,0005D28,000Required1. Prepare joumal entries to record the acquisition and the first year's depreciation,assuming that the composite method is used on a straight-ine basis.2 If the company sells machine B after four years for P 10,000 prepare the journal entry.

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Activity-based Costing (units of production) which is more popularly known as the ABC method is an…