Prob 1

Q1 FV of Land from issuance of shares

FV of donated Land
Total
Q2 Price net of discount
Cash price of machine with down payment and Installments
PV of note 1
PV of note 2
FV given plus cash paid
Total
Q3 Total payment less cash price (5.5M - 4.7M)
Interest on note 1 (1.585M x 10%)
Interest on note 2 (1.36M x 10%)
Total

6,000,000
1,000,000
7,000,000
2,700,000
4,700,000
1,585,000
1,360,000
2,300,000
12,645,000
800,000
158,500
136,000
1,094,500

Prob 2
Q1 BV of asset exchanged
Cash paid
Cost of oil inventory

5,000,000
1,500,000
6,500,000

Q3 BV of asset exchanged
Less: Cash received
Cost of oil inventory

6,000,000
1,500,000
4,500,000

3 Income from governent grant (500k / 5)

Repayment of government grant
Less: Balance of liability on gov't grant 1/1/18 (500k - 200k)
Loss on repayment
4 Cost
Less: Gov't grant
Carrying amount
Less: Residual value
Depreciable amount
Divide by
Depreciation expense
Total cost without govt grant
Less: Accumulated Depreciation 12/31/17
Carrying amount
Less: Accumulated depreciation on additional cost
Carrying amount on 1/1/18
Less: Residual value
Depreciable amount
Divide by remaining life
Depreciation current year

100,000
500,000
300,000
200,000
6,600,000
600,000
6,000,000
500,000
5,500,000
5
1,100,000
6,600,000
2,200,000
4,400,000
240,000
4,160,000
500,000
3,660,000
3
1,220,000

Add: Depreciation not recognized on gov't grant

Total 2018 depreciation expense

240,000
1,460,000

2019 Depreciation (6.6M - 500k) / 5 years

1,220,000

NA

A
B

D
D

1 Land as investment property (no intended construction)

Prob. 2
Q1 Land
Q2 Building
Q3 Land improvement
3 Cost of the machine
4 Borrowing cost from specific borrowing

4,300,000 D

4,550,000 A
9,700,000 A
950,000 A
1,200,000 C
900,000

Interest on 12% bonds

Interest on 8% note payable
Total borrowing cost
Divide by total principal
Capitalization rate*

3,600,000
800,000
4,400,000
40,000,000
11%

Average expenditures
Less: Specific borrowings
Average expenditures from general
Multiplied by capitalization rate*
Capitalizable borrowing cost from general
Borrowing cost from specific borrowing
Interest cpitalized

15,000,000
10,000,000
5,000,000
11%
550,000
900,000
1,450,000 B

Interest expense on GB (4.4M - 550k)

5 Jan. 1, 2016 Ave. Expenditure
July. 1, 2016 Ave. Expenditure
November. 1, 2016 Ave. Expenditure
Total

3,850,000 C
4,000,000
3,750,000
250,000
8,000,000

Borrowing cost from specific borrowing

Borrowing cost from general borrowing
Total capitalizable borrowing cost
2016 Expenditures
Total cost of building 12/31/16

300,000
600,000
900,000
12,000,000
12,900,000

Jan. 1, 2017 Ave Expenditures

March 1, 2017 Ave Expenditures
Total

12,900,000
5,000,000
17,900,000

Borrowing cost from specific borrowing

Borrowing cost from general borrowing
Total capitaliable borrowing cost
2017 Expenditures
Total 2017 cost
2016 cost

300,000
1,788,000
2,088,000
6,000,000
8,088,000
12,900,000

Total cost of building 12/31/17

20,988,000 B

Total interest on General borrowing (25M x 12%)

Less: Amount capitalized
Interest expense

3,000,000
1,788,000
1,212,000 C

1 Sale Price
Less: Carrying amount - July 1, 2016
Cost
Less: Accum. Depr. (4.2M - 200k) / 5 x 3
Gain on sale
2 Annual depreciation A
Annual depreciation B
Annual depreciation C
Total
Composite Life

2,500,000
4,200,000
2,400,000

1,800,000
700,000
250,000
120,000
80,000
450,000
16

3 Ending Cost (5M - 1M + 2.5M)

Composite rate
Depreciation expense

6,500,000
25%
1,625,000

4 Cost
Less: Residual value
Depreciable amount

3,300,000
300,000
3,000,000

SYD

15

1st year depreciation

2nd year depreciation

1,000,000
800,000

2016 Depreciation
2017 Depreciation (1M x 3/12) + (800k x 9/12)
12/31/17 Accumulated depreciation

750,000
850,000
1,600,000

3 2016 Depr.
2017 Depr.
2018 Depr.
Accumulated Depreciation
4 Rate
2013 Depreciation
5 1st year depreciation (6.4M x 2/8)
2nd year depreciation (6.4M - 1.6M) x (2/8)
Depreciation for Jan 1, 2013 to June 30, 2013
Depreciation for July 1, 2013 to Dec. 31, 2013
Total 2013 depreciation
6 Total cost of wasting asset

2,000,000
1,200,000
400,000
3,600,000
300
2,700,000
1,600,000
1,200,000
800,000
600,000
1,400,000
31,800,000

Rate (31.8M - 3M) / 1.2M tons

24.00

Depletion in cost of sales

1,440,000

7 2016 Depletion (12M / 1.5M) x 25,000 x 6 months

1,200,000

2016 Depreciation (9.5M - 500k) / 1.5M x 25,000 x 6 mos.

8 RE
Accumulated Depletion
Total
Less: Depletion in EI
Capital Liquidated
Maximum dividend

900,000
10,000,000
15,000,000
25,000,000
600,000.00
5,000,000.00

5,600,000
19,400,000

B
B
C

1 Revalued amount
Less: Carrying amount
Revaluation surplus 1/1 at gross
Less: Deferred tax liability (6M x 30%)
Revaluation surplus net of DTL
Less: Realization
Revaluation surplus 12/31
2016 Depreciation (17M - 4M) / 5 years

2 Revalued amount
Less: Carying amount
Revaluation surplus 1/1 at gross
Less: Deferred tax liability (6M x 30%)
Revaluation surplus net of DTL
Less: Realization
Revaluation surplus 12/31
2016 Depreciation (70M / 14)
3 Cost
Less: Accumulated Depreciation
Carrying amount 12/31/16
Recoverable amount
Less: CA
Impairment loss
4 Carrying amount of CGU
Less: Recoverable amount
Impairment loss
Less: Impairment loss on building
Impairment loss to eqpt & inventory
Ratio of equipment to total CA
Impaiment loss to equipment
Impairment loss to inventory (1.5M x 2/5)
5 Recoverable amount
Less:CA (10M - 1M)
Impairment loss

17,000,000
11,000,000
6,000,000
1,800,000
4,200,000 B
840,000
3,360,000 D
2,600,000 A
Land
15,000,000
10,000,000
5,000,000
1,500,000
3,500,000
3,500,000
5,000,000 A
9,000,000
3,000,000
6,000,000
4,500,000
6,000,000
-1,500,000 A
10,000,000
8,000,000
2,000,000
500,000 B
1,500,000
3/5
900,000 B
600,000 B
8,550,000
9,000,000
-450,000 B

CA if impairment not recognized

Less: CA 12/31/17
Gain on impairment recovery

8,000,000
7,600,000
400,000 A

2018 Depreciation (8M / 8 years)

1,000,000 A

Building
70,000,000
42,000,000
28,000,000
8,400,000
19,600,000
1,400,000
18,200,000

Total
85,000,000
52,000,000
33,000,000
9,900,000
23,100,000 B
1,400,000
21,700,000 D