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1. What is the gain on sale of truck on September 30?  2. What is the gain on sale of machinery on December 20?  3. What is the adjusted balance of the cost of property, plant and equipment as of  December 31, 2022?

1. What is the gain on sale of truck on September 30?  2. What is the gain on sale of machinery on December 20?  3. What is the adjusted balance of the cost of property, plant and equipment as of  December 31, 2022?

Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter7: Operating Assets
Section: Chapter Questions
Problem 29BE
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REQUIRED: 
 
A. Based on the application of the necessary procedures and appreciation of the above data, you 
are to provide the answers to the following: 
1. What is the gain on sale of truck on September 30? 
2. What is the gain on sale of machinery on December 20? 
3. What is the adjusted balance of the cost of property, plant and equipment as of 
December 31, 2022? 
4. What is the total depreciation expense for the year ended December 31, 2022? 
5. What is the carrying amount of the property, plant and equipment as of December 31, 
2022? 
B. Show the lapsing schedule as of December 31, 2022.  

B. PROPERTY, PLANT AND EQUIPMENT Gabaldon Company's property, plant and equipment and accumulated depreciation balances at December 31, 2021 are: Machinery and equipment Automobiles and trucks Leasehold improvements Depreciation policy: a. Depreciation methods and useful lives: Cost Accumulated Depreciation P 367,500 P1,380,000 210,000 432,000 114,326 108,000 • Machinery and equipment - straight line; 10 years. • Automobiles and trucks 150% declining balance; 5 years, all were acquired after 2017. Leasehold improvements - straight line b. Depreciation is computed to the nearest month. c. Salvage values are immaterial except for automobiles and trucks which have estimated salvage values equal to 15% of cost. Additional information: a. Gabaldon entered into a 12-year operating lease starting January 1, 2019. The leasehold improvements were completed on December 31, 2018 and the facility was occupied on January 1, 2019. b. On July 1, 2022, machinery and equipment were purchased at a total invoice cost of P325,000. Installation cost of P44,000 was incurred. c. On August 30, 2022, Gabaldon purchased new automobile for P25,000. d. On September 30, 2022, a truck with a cost of P48,000 and a carrying amount of P30,000 on December 31, 2021 was sold for P24,500. e. On December 20, 2022, a machine with a cost of P17,000, a carrying amount of P2,975 on date of disposition, was sold for P4,000.
Transcribed Image Text:B. PROPERTY, PLANT AND EQUIPMENT Gabaldon Company's property, plant and equipment and accumulated depreciation balances at December 31, 2021 are: Machinery and equipment Automobiles and trucks Leasehold improvements Depreciation policy: a. Depreciation methods and useful lives: Cost Accumulated Depreciation P 367,500 P1,380,000 210,000 432,000 114,326 108,000 • Machinery and equipment - straight line; 10 years. • Automobiles and trucks 150% declining balance; 5 years, all were acquired after 2017. Leasehold improvements - straight line b. Depreciation is computed to the nearest month. c. Salvage values are immaterial except for automobiles and trucks which have estimated salvage values equal to 15% of cost. Additional information: a. Gabaldon entered into a 12-year operating lease starting January 1, 2019. The leasehold improvements were completed on December 31, 2018 and the facility was occupied on January 1, 2019. b. On July 1, 2022, machinery and equipment were purchased at a total invoice cost of P325,000. Installation cost of P44,000 was incurred. c. On August 30, 2022, Gabaldon purchased new automobile for P25,000. d. On September 30, 2022, a truck with a cost of P48,000 and a carrying amount of P30,000 on December 31, 2021 was sold for P24,500. e. On December 20, 2022, a machine with a cost of P17,000, a carrying amount of P2,975 on date of disposition, was sold for P4,000.
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Section 179 Deduction and Modified Accelerated Cost Recovery System (MACRS) Depreciation
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