9. On January 1, 2005, Paragon Company paid P6,000,000 to acquire a new barge. In the belief that it was entitled to a refund of purchase taxes on the acquisition of the barge, the entity claimed and was refunded P600,000 by the local government. However, in late 2011 the entity repaid the refund when it became apparent that it had made an error in making the claim to the local government as it had not been entitled to the refund of purchase taxes on acquisition of the barge. The useful life of the barge is 15 years from the date of acquisition. The residual value of the barge is NIL. In 2011, the period over which the barge is expected to be economically usable increased from 15 to 26 years. However, the entity expects to dispose of its barge after using it for 20 years from the date of acquisition. On December 31, 2011, the entity assessed the residual value of the barge at P800,000. What is the carrying amount of the barge on December 31, 2011? a. 3,600,000 b. 3,400,000 c. 3,460,000 d. 3,420,000
9. On January 1, 2005, Paragon Company paid P6,000,000 to acquire a new barge. In the belief that it was entitled to a refund of purchase taxes on the acquisition of the barge, the entity claimed and was refunded P600,000 by the local government. However, in late 2011 the entity repaid the refund when it became apparent that it had made an error in making the claim to the local government as it had not been entitled to the refund of purchase taxes on acquisition of the barge. The useful life of the barge is 15 years from the date of acquisition. The residual value of the barge is NIL. In 2011, the period over which the barge is expected to be economically usable increased from 15 to 26 years. However, the entity expects to dispose of its barge after using it for 20 years from the date of acquisition. On December 31, 2011, the entity assessed the residual value of the barge at P800,000. What is the carrying amount of the barge on December 31, 2011? a. 3,600,000 b. 3,400,000 c. 3,460,000 d. 3,420,000
Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization
Section: Chapter Questions
Problem 44P
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9. On January 1, 2005, Paragon Company paid P6,000,000 to acquire a new barge. In the belief that it was entitled to a refund of purchase taxes on the acquisition of the barge, the entity claimed and was refunded P600,000 by the local government. However, in late 2011 the entity repaid the refund when it became apparent that it had made an error in making the claim to the local government as it had not been entitled to the refund of purchase taxes on acquisition of the barge. The useful life of the barge is 15 years from the date of acquisition. The residual value of the barge is NIL. In 2011, the period over which the barge is expected to be economically usable increased from 15 to 26 years. However, the entity expects to dispose of its barge after using it for 20 years from the date of acquisition. On December 31, 2011, the entity assessed the residual value of the barge at P800,000. What is the carrying amount of the barge on December 31, 2011?
a. 3,600,000
b. 3,400,000
c. 3,460,000
d. 3,420,000
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