Solutions – PPE
Prepare journal entries for the ff transactions of Company A during the year: (2pts each)
1/ Acquired a machine with an invoice price of P3M subject to a cash discount of 10% which was not taken, and freight cost of P35,000. The entity incurred P50,000 in removing the old machine prior to the installation of the new one. Machine supplies were acquired at a cost of P150,000.
2/ During the early part of the current year, the entity purchased a machine for P500,000 down and 4 monthly installments of P1.25M. The cash price of the machine was P4.7M.
3/ At the beginning of the current year, the entity purchased a machine for P2M in exchange for a non-interest bearing note requiring 4 payments of P500,000. The first payment was made at the end of the current year.
4/ At the beginning of the current year, the entity acquired a machine by issuing a 4-year, non-interest bearing note for P2M.
The implicit rate of interest for the notes in items 3 and 4 is 10%.
5/ The Company made the ff individual cash purchases:
|Land and Building||6,000,000.00|
|Machinery and office equipment||1,800,000.00|
An appraisal disclosed the following fair values:
6/ The Company acquired the assets of another entity with the ff fair values:
The entity issued 60,000 shares with P100 par value in exchange. The share had a quoted price of P150 on the date of purchase of the property.
7/ Received a parcel of land in Davao City from a philanthropist as an inducement to locate a plant in the city. The land has a fair value of P1.5M.
8/ During the year, the Company exchanged a truck with a carrying amount of P1.2M and a fair value of P2M for a truck and P200,000 cash. The fair value of the truck received was P1.8M. The cash flows from the new truck are not expected to be significantly different from the cash flows of the old truck.
9/ During the year, the Company paid P100,000 and exchanged inventory which has a carrying value of P2M and a fair value of P2.1M for other inventory in the same line of business with fair value of P2.2M.
10/ The Company traded a delivery truck for a newer model with a dealer.
|Cash price without trade-in||1,400,000.00|
|Cash payment with trade-in||980,000.00|