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Lory Company Asset Depreciation Analysis

The document provides property, plant and equipment balances and depreciation information for Lory Company as of December 31, 2009. It also includes additional transactions that occurred in 2011, and asks for the gain on sale of a truck, gain on sale of machinery, adjusted balance of property, plant and equipment as of December 31, 2011, total depreciation expense for 2011, and carrying amount of property, plant and equipment as of December 31, 2011.

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leshz zyn
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17 views1 page

Lory Company Asset Depreciation Analysis

The document provides property, plant and equipment balances and depreciation information for Lory Company as of December 31, 2009. It also includes additional transactions that occurred in 2011, and asks for the gain on sale of a truck, gain on sale of machinery, adjusted balance of property, plant and equipment as of December 31, 2011, total depreciation expense for 2011, and carrying amount of property, plant and equipment as of December 31, 2011.

Uploaded by

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

Problem 1

Lory Company’s property, plant and equipment and accumulated depreciation balance at
December 31, 2009 are:

Accumulated Cost Depreciation


Machinery and equipment P 1,380,000 P 367,500
Automobiles and trucks 210,000 114,320
Leasehold improvements 432,000 108,000

Additional information:
Depreciation methods and useful lives:
Machinery and equipment – straight line; 10 years
Automobiles and trucks – 150% declining balance; 5 years, all acquired after 2000.
Leasehold improvements – straight line
Depreciation is computed to the nearest month.
Salvage values are immaterial except for automobiles and trucks, which have an estimated
salvage values equal to 10% of cost.

Other additional information:


Lory Company entered into a 12-year operating lease starting January 1, 2008. The
leasehold improvements were completed on December 31, 2007 and the facility was
occupied on January 1, 2008.
- On July 1, 2011, machinery and equipment were purchased at a total invoice cost of
P325,000. Installation cost of P44,000 was incurred.
- On August 30, 2011, Lory Company purchased new automobile for P25,000.
- On September 30, 2011, a truck with a cost of P48,000 and a carrying amount of
P30,000 on December 31, 2010 was sold for P23,500.
- On December 30, 2011, a machine with a cost of P17,000, a carrying value of P2,975 on
date of disposition, was sold for P4,000.

Questions
1. The gain on sale of truck on September 30, 2011 is:

2. The gain on sale of machinery on December 30, 2011 is:

3. The adjusted balance of the property, plant, and equipment as of December 31, 2011 is:

4. The total depreciation expense to be reported on the income statement for the year
ended December 31, 2011 is:

5. The carrying amount of property, plant, and equipment as of December 31, 2011 is:

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