The property, plant and equipment section of the Statement of Financial Position at December 31, 2019 of May-Jo Machine Shop Co. appears as follows: Land P 800,000 Building P1,500,000 450,000 P 700,000 Less: Accumulated depreciation Equipment Less: Accumulated depreciation Net property, plant and equipment Because of good business conditions the company decided to move to a more 1,050,000 400,000 300,000 P2,150,000 strategic location. are described below: Transactions on the transfer of location for the year 2020 1. The land and building on the old site were sold for P1,700,000 on January 2, 2020. 2. Equipment with a depreciated value of P150,000 (original cost, P400,000) was sold for P120,000 on April 1, 2020. 3. New equipment with an invoice price of P300,000 was purchased on May 1, 2020. A 2% discount was allowed. Delivery of the equipment to the site was P1,000 paid to the hauler and P1,500 was spent for installation.
The property, plant and equipment section of the Statement of Financial Position at December 31, 2019 of May-Jo Machine Shop Co. appears as follows: Land P 800,000 Building P1,500,000 450,000 P 700,000 Less: Accumulated depreciation Equipment Less: Accumulated depreciation Net property, plant and equipment Because of good business conditions the company decided to move to a more 1,050,000 400,000 300,000 P2,150,000 strategic location. are described below: Transactions on the transfer of location for the year 2020 1. The land and building on the old site were sold for P1,700,000 on January 2, 2020. 2. Equipment with a depreciated value of P150,000 (original cost, P400,000) was sold for P120,000 on April 1, 2020. 3. New equipment with an invoice price of P300,000 was purchased on May 1, 2020. A 2% discount was allowed. Delivery of the equipment to the site was P1,000 paid to the hauler and P1,500 was spent for installation.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 9P: During 2019, Ryel Companys controller asked you to prepare correcting journal entries for the...
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1) Prepare entries for the year 2020 related to the above transactions.
2) How much is the gain or loss on sale and trade-in of property, plant and equipment?
3)Prepare the section of the Property, Plant and Equipment for May-Jo Machine Shop Co. to be shown in the
Transcribed Image Text:The property, plant and equipment section of the Statement of Financial Position
at December 31, 2019 of May-Jo Machine Shop Co. appears as follows:
Land
P 800,000
Building
Less: Accumulated depreciation
Equipment
Less: Accumulated depreciation
Net property, plant and equipment
Because of good business conditions the company decided to move to a more
P1,500,000
450,000
P 700,000
1,050,000
400,000
300,000
P2,150,000
strategic location.
Transactions on the transfer of location for the year 2020
are described below:
1. The land and building on the old site were sold for P1,700,000 on January 2,
2020.
2. Equipment with a depreciated value of P150,000 (original cost, P400,000) was
sold for P120,000 on April 1, 2020.
3. New equipment with an invoice price of P300,000 was purchased on May 1, 2020.
A 2% discount was allowed.
to the hauler and P1,500 was spent for installation.
4. The land where the company moved in as new site was given by a friend of the
Delivery of the equipment to the site was P1,000 paid
It had an appraised value of
company President as gift on February 1, 2020.
P5,000,000. However, the company paid P250,000 to the B.I.R. for taxes and other
costs directly related to the land.
5. An old building on the land had to be demolished and the company paid P400, 000
on this on February 15, 2020.
6. A new equipment with an invoice cost of P150,000 was purchased on October 31,
2020.
The company paid P100, 000 cash and was granted a trade-in allowance of
P50,000
depreciation of P15,000.
7. May-Jo company constructed a new building at its new site for P2,800,000 on
on
used equipment which had
cost
of P40,000 and
accumulated
a
a
May 31,2020.
8. Extraordinary repairs on the old equipment amounting to P50,000 were made
after the equipment have been moved to the new site on June 15, 2020.
9. Buildings are depreciated using straight-line with 30 year life while equipment
have 10 year life with no salvage values.
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