JADINE COPPERMINES, INC.

C Depletion rate per ton (P14,580,000 / 1,620,000) P9

Copper ore mined in 2015 (15,000 x 6 months) x 90,000
Depletion for 2015 P 810,000
Depletion per books 1,215,000
Overstatement of depletion expense P405,000

D Depreciable cost of machinery (P1,800,000 x 90%) P1,620,000

Estimated copper ore reserve 1,620,000
Depreciation rate per ton P1
Copper ore mined in 2015 90,000
Depreciation expense for 2015 P 90,000
Depreciation per books 120,000
Overstatement of depreciation expense P 30,000

PAKO COMPANY

D Balance, Jan. 1 P1,800,000

June 30 acquisition (P1,080,000 + P48,000) 1,128,000
Sept. 30 sale (150,000)
Dec. 1 trade in: old machine (90,000)
new machine 270,000
Balance, Dec. 31 P2,958,000

A Remainder of beginning balance (P1,800,000 – P150,000 – P90,000 =

P1,560,000 x 10%) P156,000
June 30 acquisition (P1,128,000 x 10% x 6/12) 56,400
Sept. 30 sale (P150,000 x 10% x 9/12) 11,250
Dec. 1 trade in: old machine (P90,000 x 10% x 11/12) 8,250
new machine (P270,000 x 10% x 1/12) 2,250
Depreciation expense for 2015 P234,150

BULKAN COMPANY

D January 1, 2012
Total cost of machine (P300,000 + P3,000 + P12,000) P315,000
Residual value (12,000)
Depreciable cost P303,000
Estimated useful life 10 years
Annual depreciation P30,300

Depreciable cost P303,000

Depreciation, 2012 – 2014 (P30,300 x 3 years) (90,000)
Remaining depreciable cost, Jan. 1, 2015 P212,100
Cost of new parts 37,800
Total P249,900
Remaining useful life (10 years – 3 years) 7 years
Revised annual depreciation P35,700
SAMSON MFG. CO.

C Actual borrowing cost:

Specific borrowing (P5 million x 10%) P500,000
General borrowings:
P25 million x 8% P2,000,000
P15 million x 6% 900,000 2,900,000
Total P3,400,000
Capitalization rate (P2,900,000/P40 million) 7.25%
Average expenditures – 2014 P7,250,000
Capitalizable interest – 2014:
Specific borrowing (P5 million x 10%) P500,000
General borrowings (P7,250,000 – P5,000,000 = P2,250,000 x 7.25%) 163,125
Total P663,125

B Average expenditures – 2015 P16,163,125

Capitalizable interest – 2015:
Specific borrowing (P5 million 10% x 6/12) P250,000
General borrowings (P16,163,125 – P5,000,000 = P11,163,125 x 7.25% x 6/12) 404,663
Total P654,663

A 2014 interest expense (P3,400,000 – P663,125) P2,736,875

D 2015 interest expense (P3,400,000 – P654,663) P2,745,337

B Accumulated expenditures before interest P19,500,000

Interest capitalized in 2014 and 2015 (P663,125 + P654,663) 1,317,788
Total cost of building P20,817,788

TGR Company

D Trade-in – June 30, 2013

Cost P157,200
Accum. depreciation, 1/1/11 – 6/30/13 (P157,200 x 20% x 2.5 yrs.) 78,600
Carrying value 78,600
Trade-in value 129,000 P50,400
Sale – Jan. 1, 2014
Cost P132,000
Accum. depreciation, 1/1/11 – 1/1/14 (P132,000 x 20% x 3 yrs.) 79,200
Carrying value 52,800
Net proceeds 71,250 18,450
Sale – October 1, 2015
Cost P120,000
Accum. depreciation, 1/1/11 – 10/1/15 (P120,000 x 20% x 4 9/12) 114,000
Carrying value 6,000
Proceeds 24,000 18,000
Total gain P86,850

C Machine acquired on Sept. 30, 2011 (P180,000 + P6,000) P186,000

 Machine acquired on June 30, 2012 (P240,000 x 98%) 235,200
Machine acquired on June 30, 2014 (list price) 279,000
Total P700,200

C Machine acquired on:

Sept. 30, 2011 (P186,000 x 20% x 4 3/12) P158,100
June 30, 2012 (P235,200 x 20% x 3 6/12) 164,640
June 30, 2013 (P279,000 x 20% x 2 6/12) 139,500
Accumulated depreciation, December 31, 2015 P462,240

B
Date of
Acquisition Cost 2011 2012 2013 2014 2015 Total
1/1/11 P157,200 P31,440 P31,440 P15,720 P0 P0 P 78,600
120,000 24,000 24,000 24,000 24,000 18,000 114,000
132,000 26,400 26,400 26,400 0 0 79,200
9/30/11 186,000 9,300 37,200 37,200 37,200 37,200 158,100
6/30/12 235,200 0 23,520 47,040 47,040 47,040 164,640
6/30/13 279,000 0 0 27,900 55,800 55,800 139,500
Correct depreciation P91,140 P142,560 P178,260 P164,040 P158,040 P734,040
Depreciation per client 97,440 154,752 153,802 108,791 82,233 597,018
Over (under)statement P 6,300 P 12,192 (P 24,458) (P 55,249) (P 75,807) (P 137,022)

A Depreciation expense (2015) 75,807

Retained earnings (2011 – 2014) 61,215
Accumulated depreciation 137,022

ISIDRO MANUFACTURING COMPANY

B Depreciation expense for 2012:

Truck #1 (P180,000/5) P 36,000
Truck #2 (P220,000/5) 44,000
Truck #3 (P300,000/5 x ½) 30,000
Truck #4 (P240,000/5) 48,000
Truck #5 (P400,000/5 x ½) 40,000
Total P198,000

A Trade-in value of Truck #3 (P400,000-P220,000) P180,000

Book value of Truck #3:
Cost P300,000
A/D, 1/1/11 -0 7/1/12 (P300,000/5 x1.5) (90,000) 210,000
Loss on trade-in P 30,000
A Truck #2 P220,000
Truck #5 400,000
Truck #6 420,000 P1,040,000
Accumulated depreciation:
Truck #2 (fully depreciated 7/1/14) P220,000
Truck #5, 7/1/12 – 12/31/15 (P400,000/5 x 3.5) 280,000
Truck #6, 7/1/14 – 12/31/15 (P420,000/5 x 1.5) 126,000 626,000
Book value, 12/31/15 P414,000
C 2012 2013 2014 2015 Total
Truck #1 P36,000 -- -- -- P 36,000
Truck #2 44,000 P44,000 P22,000 -- 110,000
Truck #3 30,000 -- -- -- 30,000
Truck #4 48,000 48,000 24,000 -- 120,000
Truck #5 40,000 80,000 80,000 P80,000 280,000
Truck #6 -- -- 42,000 84,000 126,000
Correct P198,000 P172,000 P168,000 P164,000 P702,000
Per client 210,000 225,000 250,500 304,000 989,500
Over P 12,000 P 53,000 P82,500 P140,000 P287,500