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Audit of BTS Company Assets 2015

BTS Company provided a property, plant, and equipment schedule as of December 2013 for audit purposes. It lists land, buildings, machinery and equipment, and furniture and fixtures with their costs, accumulated depreciation, useful lives, and depreciation methods. In 2015, the company incurred repairs to buildings, exchanged old machinery for new machinery from Exo Company, and sold some furniture and fixtures while acquiring replacement furniture on installment terms.

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29 views1 page

Audit of BTS Company Assets 2015

BTS Company provided a property, plant, and equipment schedule as of December 2013 for audit purposes. It lists land, buildings, machinery and equipment, and furniture and fixtures with their costs, accumulated depreciation, useful lives, and depreciation methods. In 2015, the company incurred repairs to buildings, exchanged old machinery for new machinery from Exo Company, and sold some furniture and fixtures while acquiring replacement furniture on installment terms.

Uploaded by

leshz zyn
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd

Problem 1

BTS Comany presented to you the following Property, Plant and Equipment schedule as of
December 2013, in line with your audit of the same for 2015:

Cost Accumulated Useful life/


Depreciation Depreciation Method
Land 4,200,000 - -
Building 9,000,000 3,095,100 20 years/ Double Declining
Machinery and equipment 15,000,000 6,000,000 10 years/ Straight line
Furniture and Fixture 6,000,000 3,709,091 10 years/SYD

Audit notes:
a. The assets were acquired at the beginning of 2011 when the company started the
operations.
b. On March 1, 2015 PQR incurred ₱230,000 in repairs cost to the various parts of the
building.
c. On June 30, 2015 old machinery which originally costs ₱2,400,000 was exchanged
for a machinery of Exo Company. Exo Company acquired the said machinery at
₱5,000,000 on July 1, 2009. The fair value of PQR Corp.’s machinery on the
exchange dates was at ₱1,250,000. PQR Corp. paid additional cash at ₱200,000 on
the exchange which was deemed to have the necessary commercial substance.
d. On March 1, 2015 some furniture and fixtures were sold for ₱400,000. This furniture
were originally acquired at ₱1,800,000. Replacement furniture were acquired on
June 30, 2015 at a total instalment price of ₱2.4M payable in 3 equal annual
installments starting June 30, 2016. Prevailing market rate of interest on this date
was at 8%. Additional freight and handling costs were paid at ₱138,322.

Questions:
1. Building
2. Machinery and equipment
3. Furniture and fixture
4. What is the gain or loss on the exchange transaction on June 30, 2015?

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