The total depreciation for the year ended December 31, 2020 is 5. The carrying amount of production machine as of December 31, 2020 is
The total depreciation for the year ended December 31, 2020 is 5. The carrying amount of production machine as of December 31, 2020 is
Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Chapter5: Professional Auditing Standards And The Audit Opinion Formulation Process
Section: Chapter Questions
Problem 39RQSC
Related questions
Question
In the audit of the books of Yellow Corporation for the year 2020, the following items and information appeared in the
Production Machine account of the client:
Date Particulars Debit Credit
01/01 Balance–Machine 1, 2, 3, and 4 at
P180,000 each P 720,000
02/28 Machine 5
Machine 1
396,000
P 6,000
09/01 Machine 6 192,000
12/01 Machine 7 432,000
The Accumulated Depreciation account contained no entries for the year 2020. The balance on January 1, 2020 per your
audit, was as follows:
Machine 1 P168,750
Machine 2 78,750
Machine 3 67,500
Machine 4 45,000
Based on your further inquiry and verification, you noted the following:
1. Machine 5 was purchased for cash; it replaced Machine 1, which was sold on this date for P6,000.
2. Machine 2 was destroyed by the thickness of engine oil used leading to explosion on December 1, 2020. Machine 7
was to replace Machine 2.
3. Machine 3 was traded in for Machine 6 at an allowance of P24,000; the difference was paid in cash and charged to
Production Machine account.
4. Depreciation rate is recognized at 25% per annum
Questions:
4. The total depreciation for the year ended December 31, 2020 is
5. The carrying amount of production machine as of December 31, 2020 is
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