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MODULE 11 PACKET
AE 15 and ELEC 1 – INTERMEDIATE ACCOUNTING
MODULE 11 MEASUREMENT, ACQUISITION AND ACCOUNTING FOR PROPERTY,
PLANT AND EQUIPMENT

Welcome to Module 11
In this module, we will discuss the acquisition and measurement of property, plant and equipment. At the
end of this module, you will be answering multiple choice questions and straight problems.

CONSULTATION HOURS:
Virtual time: During your class schedule (either Monday or Tuesday)
Phone or Messenger: Every Thursday from 8am to 11am and 1pm to 4pm

MODULE 11 LEARNING OBJECTIVES:

By the end of this module, the students will be able to:
1. Describe the nature of property, plant and equipment
2. Identify specific items of property, plant and equipment
3. Know the recognition of property, plant and equipment
4. Understand the initial and subsequent measurement of property, plant and equipment

COURSE CONTENT FOR MODULE 11:

ACTIVITY DESCRIPTION TIME TO COMPLETE

Assigned Reading Property, Plant and Equipment 1.5 hours

ACTIVITY 11 Problem Solving 2 hours

Video discussion Accounting for Property, Plant and Equipment 1 hour

Summative quiz for module 10 (to be

Quiz 1.5 hours
announced)

Answers to ACTIVITY 11 will be due on NEO Classroom

, 2020 thru Google LMS or
Facebook Group. Correct answers will be posted thereafter for your reference.

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ASSIGNED READING

Property plant and equipment are tangible assets that are held for use in production or supply of goods or
services, for rental to others, or for administrative purposes, and are expected to be used during more
than one period.

Characteristics of Property, Plant and Equipment:

a. Tangible assets - with physical substance
b. Used in business - for production or supply of
goods or services, rental purposes and
administrative purposes
c. Used over a period of more than one year

Examples of PPE:
Land and land improvements
Building
Machinery
Ship, Aircraft, Motor Vehicle
Furniture and Fixtures
Tools and Equipment
Patterns, molds and dies
Bearer plants

Recognition of Property, Plant and Equipment:

a. it is probable that future economic benefits economics associated with the asset will flow to the
entity
b. the cost of the asset can be measured reliably

After initial recognition, an entity shall choose either the cost model or the revaluation model as the
accounting policy for property, plant and equipment. Such accounting policy shall be applied to an entire
class of property, plant and equipment.
Cost Model - shall be carried at COST less ACCUMULATED DEPRECIATION less ACCUMULATED
IMPAIRMENT LOSS
Revaluation Model - shall be carried at revalued carrying amount = FAIR VALUE at the date of revaluation
less SUBSEQUENT ACCUMULATED DEPRECIATION and ACCUMULATED IMPAIRMENT LOSS

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Spare parts and servicing equipment or carried as inventory and recognized as an expense when
consumed. However, major standby spare-parts and stand-by equipment qualify as property, plant and
equipment when the entity expects to use them during more than one period.

An item of property, plant and equipment that qualifies for recognition as an asset shall be measured at
cost. Cost is the amount of cash or cash equivalent paid and the fair value of the other consideration
given to acquire on asset at the time of acquisition or construction.

Elements of cost:
1. Purchase price, including import duties and nonrefundable purchase taxes, after deducting trade
discounts and rebates
2. Cost directly attributable to bringing the asset to the location and condition necessary for it to be
capable of Operating in a manner intended by management
3. Initial estimate of the cost of dismantling and removing the item and restoring the site on which it is
located, the obligation for which an entity incurs
Examples of directly attributable costs
1. Costs of employee benefits arising directly from the acquisition of property, plant and equipment
2. Cost of site preparation
3. Initial delivery and handling costs
4. installation and assembly costs
5. Professional fees
6. Cost of testing whether the asset is functioning properly

Costs not qualifying for recognition and are expensed

1. Costs of opening a new facility
2. Costs of introducing a new product or service, including cost of advertising and promotion
3. Costs of conducting business in a new location or with a new class of customer, including costs of
staff training
4. Administration and other general overhead costs
5. Costs incurred while an item capable of operating in the manner intended by management has yet
to be brought into use or is operated at less than full capacity
6. Initial operating losses
7. Costs of relocating or reorganizing part or all of an entity's operations

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Acquisition of property
CASH ON ACCOUNT
The cost of an item is the cash price The cost of the asset = invoice price minus the discount (if
equivalent at the recognition date paid subject to cash discount), regardless of whether the discount
plus directly attributable costs such as is taken or not. If the discount is not taken, it charged to
freight, installation cost costs and other purchase discount loss shown as other expense. Cash
costs necessary in bringing the asset to discounts are considered as reduction of cost and not as
the location and condition for the intended income.
use. When several assets are acquired
at lump sum price such is apportioned on Journalize: Purchased equipment for P8,000, 2/10, n/30.
the basis of relative fair value.
For example, building and Gross Method Net Method
machinery are acquired at a single
cost of P10,000,000. At the time of Equipment 8,000 Equipment 7,840
acquisition, the building has a fair Accounts Payable 8,000 Accounts Payable 7,840
value of P7,000,000 and the
machinery, P1,000,000 Within the discount period Within the discount period
Accounts Payable 8,000 Accounts Payable 7,840
FV Fraction Allocated Cash 7,840 Cash 7,840
Equipment 160
cost
Building 7M 7/8 P8,750,000 Beyond discount period
Beyond discount period
Machinery 1M 1/8 1,250,000 Accounts Payable 8,000 Accounts Payable 7,840
8M P10,000,000 Purchase discount lost 160 Purchase discount lost 160
Cash 8,000 Cash 8,000
Equipment 160

ON INSTALLMENT BASIS
An asset may be offered at a cash price and at an installment price. If it is purchased at the installment
price, the asset shall be recorded at the cash price. The excess of the installment price over the cash price
is treated as an interest to be amortized over the credit period.
A machinery is purchased at an installment price of P200,000 for a downpayment of P80,000 and the
balance payable in 2 years. The cash price of the machinery is P170,000. A promissory note is issued
for the installment balance of P120,000.
Acquisition of machinery
Machinery 170,000
Discount on Note Payable 30,000
Note Payable 120,000
Cash 80,000
First Installment Payment Note Payable Fraction Interest exp
Note Payable 60,000 1st yr 120,000 120/180 20,000
Cash 60,000 2nd yr 60,000 60/180 10,000
Amortize the discount on note payable 180,000 30,000
Interest Expense 20,000
Discount on Note Payable 20,000

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If there is no available cash price, the asset is recorded at an amount equal to present value of all payments
using an implied interest rate.

Note Payable – Present value of note payable = Implied Interest recorded as Discount on Note Payable

At the end of the year, Discount on Note Payable is amortized by crediting it and debiting Interest Expense
using the effective interest method.

ISSUANCE OF SHARE CAPITAL ISSUANCE OF BONDS PAYABLE

A piece of land is acquired by issuing 20,000 shares A building is acquired by issuing bonds payable
with par value of P50. At the of acquisition, the fair with face amount of P4,000,000. That time, the fair
value of the land is P1,500,000 and the share is value of the building is P5,000,000 and the quoted
quoted at P80 per share. price of the bonds is P4,800,000.

The property shall be measured at an amount The asset acquired by issuing bonds payable is
equal to the following in order of priority: measured in the following order:
a. Fair value of property received (preferred) a. Fair value of bonds payable (preferred)
Land 1,500,000 Building 4,800,000
Share capital (20,000xP50) 1,000,000 Bonds Payable 4,000,000
Share premium 500,000 Premium on bonds payable 800,000
b. Fair value of the share capital b. Fair value of asset received
Land (20,000xP80) 1,600,000 Building 5,000,000
Share capital (20,000xP50) 1,000,000 Bonds Payable 4,000,000
Share premium 600,000 Premium on bonds payable 1,000,000
c. Par or stated value of the share capital c. Face amount of bonds payable
Land 1,000,000 Building 4,000,000
Share capital (20,000xP50) 1,000,000 Bonds Payable 4,000,000

Commercial substance is a new notion and is defined as the event or transaction causing the cash flows
of the entity to change significantly by reason of the exchange

EXCHANGE WITH COMMERCIAL SUBSTANCE EXCHANGE WITH NO COMMERCIAL SUBSTANCE

When the cash flows of the asset received differ No gain or loss is recognized when the exchange lacks
significantly from the cash flows of the asset commercial substance.
transferred
Cost of the property: Cost of the property: carrying amount of the asset
Payor: FV of asset given plus cash payment given plus/less any cash involved for the
Recipient: FV of asset given less cash received payor/recipient
Jolli Bee Mac Do
Equipment 160,000 200,000 Equipment 80,000 100,000
Accum. Depreciation 90,000 135,000 Accum. Depreciation 38,000 40,000
Carrying Amount 70,000 65,000 Carrying Amount 42,000 60,000
Fair Value 60,000 80,000 Fair Value 45,000 50,000
Cash paid by J to B 20,000 20,000 Cash paid by M to D 5,000 5,000

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Books of Jolli (Payor) Books of Mac (Payor)

Fair value of asset given 60,000 Carrying Amount 42,000
Add: Cash Payment 20,000 Add: Cash Payment 5,000
Cost of New Asset (FV of asset received) 80,000 Cost of New Asset 47,000

Equipment- new 80,000 FV of given 60,000 Equipment- new 47,000

Accum. Depreciation 90,000 CV (160-90) 70,000 Accum. Depreciation 38,000
Loss on Exchange 10,000 Equipment – old 80,000
Equipment – old 160,000 Cash 5,000
Cash 20,000
Books of Do
Books of Bee Carrying Amount 60,000
Fair value of asset given 80,000 Less: Cash Received 5,000
Less: Cash Received 20,000 Cost of New Asset (FV of asset received) 55,000
Cost of New Asset (FV of asset received) 60,000
Equipment- new 55,000
Equipment- new 60,000 Cash 5,000
Cash 20,000 FV of given 80,000 Accum. Depreciation 40,000
CV (200-135) 65,000
Accum. Depreciation 135,000 70,000
Equipment – old 100,000
Equipment – old 200,000
Gain on Exchange 15,000

TRADE IN

A property is acquired by exchanging another property as part payment and the balance payable in cash
or any other form of payment in accordance with agreed terms. It involves a nondealer acquiring the asset
from a dealer. It usually involves a significant amount of cash and therefore, the transaction has
commercial substance.

As an exchange with commercial substance, the new asset is recorded at the following in the order of
priority:
a. Fair value of asset given plus cash payment
b. Trade in value of asset given plus cash payment (Fair value of asset received)
Trade in value = Cash price without Trade In – Cash price with Trade In

An entity traded an old machinery with a dealer for a newer model.

Old Equipment New Equipment

Cost 280,000 List Price 400,000
Accumulated Depreciation 200,000 Trade in value of old equipment (100,000)
Carrying Amount 80,000 Cash payment 300,000
Fair Value 70,000
Trade in value 100,000

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FAIR VALUE APPROACH TRADE IN VALUE APPROACH

Fair value of asset given 70,000 Trade in value of asset given 100,000
Cash payment 300,000 Cash payment 300,000
Cost of new asset 370,000 Cost of new asset 400,000

Fair value of asset given 70,000 Trade in value of asset given 100,000
Less: Carrying amount 80,000 Less: Carrying amount 80,000
Loss on exchange (10,000) Gain on exchange 20,000

Equipment – new 370,000 Equipment – new 400,000

Accum. Depreciation 200,000 Accum. Depreciation 200,000
Loss on exchange 10,000 Equipment – old 280,000
Equipment – old 280,000 Cash 300,000
Cash 300,000 Gain on exchange 20,000

DONATION

Philippine GAAP provides that contributions received from shareholders shall be recorded at the fair value
and credited to donated capital. Expenses incurred in connection with the donation, like payment of
registration fees and legal fees do not increase the value of the asset and shall be charged to the donated
capital account. However, directly attributable costs incurred subsequently necessary to bring the donated
asset to the location and condition for the intended use shall be capitalized.

Gifts, grants of funds or other assets restricted for property, plant and equipment received from
nonshareholders shall be recorded at fair value when received or receivable recognized as income.

CONSTRUCTION

The cost of self-constructed asset include: direct cost of materials, direct cost of labor and indirect cost
and incremental overhead specifically identifiable or traceable to the construction. Overhead not
specifically identifiable may be allocated based on direct labor cost or direct labor hours.

If the actual cost of construction is less than the price at which the constructed asset can be purchased
from outside parties, there is saving, not income. This saving results to a lower depreciation for the asset.

If the actual cost of construction is more than the price at which the asset can be purchased, the difference
is not a loss. Despite the difference in cost, there is no assurance that the asset if purchased is the same
as that constructed.

However, if there is clear evidence that the actual cost is materially excessive and this is due to construction
inefficiencies or failures that may be due to temporary, idle capacity or industrial disputes, this is treated
as loss chargeable to management, and should not burden future periods.

Cost of abnormal amount of wasted material, labor or overhead is not included in the cost of the asset.

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Derecognition means that the cost of the property, plant and equipment together with its accumulated
depreciation shall be removed from the accounts.

The carrying amount of the property, plant and equipment shall be derecognized on disposal or when no
future economic benefits are expected from the use or disposal.

Net disposal proceeds less carrying amount of the item = gain or (loss) from the derecognition of an item
of property, plant and equipment.

A property is fully depreciated when the carrying

amount is zero or equal to the residual value.

The asset account and the related accumulated

depreciation are closed and the residual value is
set up in a separate account.

However, many entities continue to use an asset

after it has been fully depreciated. The cost of an
asset still in service shall not be removed from the
accounts. Disclosure of fully depreciated assets is
encouraged but not required.

Property classified as held for sale

An asset that is available for immediate sale in the present condition within one year from the date of
classification as held for sale. This should be presented as current asset, and not as property, plant and
equipment.

A noncurrent asset classified as held for sale is measured at the lower of carrying amount or fair value less
cost of disposal. Such asset shall not be depreciated. The writedown to fair value less cost of disposal is
treated as an impairment loss.

Idle or abandoned property

A noncurrent asset that is to be abandoned shall not be classified as held for sale because the carrying
amount would be recovered principally through continuing use.

Temporary idle activity or abandonment does not preclude depreciating the asset as future benefits are
consumed not only through usage but also through wear and tear and obsolescence.

Noncurrent asset to be abandoned includes an item of property, plant and equipment that is to be used
until the end of the economic life.

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LAND and BUILDING

The classification of land depends on the nature and purpose of the land.

Property, Plant and Equipment Investment Property Inventory

Used as plant site Held for a currently undetermined use Held for current sale
Held definitely as a future plant site Held for long-term capital appreciation

Costs chargeable to land Cost chargeable to building

1. Purchase price When purchased:
2. Legal fees and other expenses to 1. Purchase price
establish clean title 2. Legal fees and other expenses incurred in connection
3. Broker or agent commission with the purchase
4. Escrow fees 3. Unpaid taxes up to date of acquisition
5. Registration Fees and transfer of title 4. Interest, mortgage, lien and other encumbrances on
6. Cost of relocation or reconstruction of the building assumed by buyer
property belonging to others in order 5. Payments to tenants to induce them to vacate the
to acquire possession. building
7. Mortgages, encumbrances and 6. Any renovating or remodeling costs to put the building
interest on such mortgages assumed in a condition suitable for its intended use such as
by buyer lighting installations, partitions and repairs.
8. Unpaid taxes up to date of acquisition When constructed
assumed by buyer 1. Materials used, labor employed and overhead incurred
9. Cost of survey during construction
10. Special assessments 2. Building permit or license
11. Payments to tenants to induce them 3. Architect, superintendent, safety inspection fees
to vacate the land to prepare such 4. Cost of excavation
land for its intended use but not to 5. Cost of temporary buildings used as construction
make room for the construction of offices and tools or materials shed, cost of temporary
new building safety fence around construction site and its
12. Cost of permanent improvements subsequent removal.
such as cost of clearing, grading, Permanent fence is a land improvement
leveling and landfill 6. Interest on construction loans and insurance incurred
13. Cost of option to buy the acquired during the construction
land (if land is not acquired, this cost 7. Expenditures for service equipment and fixtures made
is expensed) a permanent part of the structure

Special assessments are taxes paid by the landowner as a contribution to the cost of public improvements
that increase the value of the land and are capitalized as cost of land.

Real property taxes are outright expense. Only those assumed by the buyer up to the date of acquisition
are capitalized.

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Land improvements not subject to depreciation are Land improvements that are depreciable over their
charged to the land account. useful life are charged to a special account “land
improvements.”
Cost of surveying, clearing, grading, leveling and Fences, water systems, drainage systems,
landfill, subdividing and other cost of permanent sidewalks, pavements and cost of trees, shrubs
improvement and other landscaping

Sidewalks, pavements, parking lot, driveways are charged to Building Account if they are part of the
blueprint. If they are occasionally made or incurred not in connection with the construction of a new
building, these are Land Improvements.

Where insurance is taken during the construction of a building, the cost is charged to building because
it is a necessary and a reasonable cost of bringing the building into existence. Without insurance, payment
for damages for injuries sustained during the construction should be expensed outright because the
damages represent management failure or negligence in procuring insurance and are not a reasonable
and necessary cost.

Expenditures for shelves, cabinets and partitions may be charged to the building or furniture and fixtures
depending upon the nature of the expenditures. If these are immovables (attached to the building), they
are charged to the building. If such expenditures are movable, these are charged to furniture and fixtures.

Ventilating system, lighting system, elevator

If installed during construction, these are charged to building account. Otherwise, it is charged to building
improvements and depreciated over their useful or remaining life of the building, whichever is shorter

Interpretation on land and building

1. Land and an old Old building – usable Old building – unusable

building purchased at a Single cost is allocated to land Single cost is allocated to land only
single cost and building based on FV
2. Old building Carrying amount of usable old Demolition cost less salvage value =
immediately building = LOSS if new building is CAPITALIZED as new building
demolished to make accounted for as PPE or
room for the new Investment Property
building Carrying amount of usable old Demolition cost less salvage value =
building = CAPITALIZED as CAPITALIZED as land if such
building if new building is demolition was to prepare the land for
accounted as Inventory the intended use but not for the
construction of the building
3. A building is acquired Carrying amount of usable old Demolition cost less salvage value =
and used in prior period building = LOSS if new building is CAPITALIZED as new building
but demolished in accounted for as PPE or
current period to make Investment Property Any payments paid to tenants to
room for a new building induce them to vacate the building
shall be charged to the cost of the new
building

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MACHINERY

A purchased machinery includes the following costs:

• Purchase price
• Freight, handling, storage and other cost related to acquisition
• Insurance while in transit
• Irrevocable or nonrefundable purchase tax
• Installation cost, including site preparation and assembling
• Cost of testing and trial run, and other cost necessary in
preparing the machinery for its intended use
• Estimate of cost of dismantling and removing the machinery and
restoring the site on which it is located, and for which the entity
has a present obligation
• Consultant’s fee for advice on the acquisition of the machinery
• Cost of safety rail and platform surrounding the machine
• Cost of water device to keep machine cool

What re not charged to machinery?

The removal cost, not previously recognized, of an old machinery to make room for a
new one, is charged to expense.
Value added tax on the purchase is charged to input tax which is offset against output
tax.

TOOLS

Machine Tools include drills and punches. Hand tools include hammer and saws.

PATTERNS AND DIES

These are used in designing or forging out a particular product. If used for the regular product, they are
recorded as assets and are depreciated over the useful life. If used for specially ordered product, they
form part of the cost of the special product.

EQUIPMENT

Cost includes purchase price, freight and other handling charges, insurance while in transit, installation
costs and other costs necessary in preparing them for the intended use.

Delivery equipment – cars, trucks and other vehicles used in business operations. Motor vehicle
registration fees are expensed outright.

Store and office equipment – computers, typewriters, adding machines, cash register and calculator.
Those identified with selling are store equipment, otherwise they are office equipment.

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Furniture and fixtures – showcases, counters, shelves, display fixtures, cabinets, partitions, safes, desks
and tables. They can also be either store or office equipment.

RETURNABLE CONTAINERS

Bottles, boxes, tanks, drums and barrels returned to the seller

by the buyer when the contents are consumed or used.

Containers in big units or of great bulk as in the case of tanks,

drums and barrels are classified as property, plant and
equipment.

Those that are small and individually involve small amount like bottles and
boxes are classified as other noncurrent assets. Those that are not
returnable are charged to expense.

CAPITAL EXPENDITURE – benefits current and future periods and is reported as an asset.

REVENUE EXPENDITURE – benefits current period only and is reported as an expense.

A subsequent cost is capitalized if it will increase the future service potential of an asset, but if it merely
maintains the existing level of standard performance, the cost is expensed when incurred.

For us accountants, PPEs are PROPERTY, PLANT and EQUIPMENT (not personal protective equipment)

Learn More:
https://corporatefinanceinstitute.com/resources/knowledge/accounting/ppe-property-plant-equipment/

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Additions Improvements or Replacements Repairs Rearrangement

Betterments Cost
Modifications that Increase the service Substitution but Restore to good Relocation or
increase the physical life or the capacity of new asset is not operating redeployment of
size or capacity the asset better than old condition upon an existing PPE
asset breakdown
Entirely New Unit Improvements with no Replace major Extraordinary Relocating or
construction of a part replacement is parts o capitalized reorganizing
new building. added to cost of the Extraordinary Ordinary costs of existing
Depreciated over existing asset repairs o expensed PPE - expensed
useful life
Expansion, Replacement of an Replace minor Repair is Rearrangement
Enlargement or asset or a part thereof parts restorative to merely
Extension for a better or superior Ordinary bring back to maintains the
quality: repairs good operating existing level of
addition of a wing to wooden shingles vs condition while standard
a building or Tile Roof Replace old maintenance is performance of
additional storeys. ordinary glass vs asset by new one preventative the asset
Depreciated over Tempered Glass Old truck is keeping asset in
useful life of the old motor vs Powerful replaced by a good condition.
expansion or Motor of a machine new truck.
remaining useful life nipa roofing vs This is Day-to-day
of the asset of which Galvanized Iron capitalizable servicing of the
it is a part of, wooden floor vs as new asset property is an
whichever is shorter Concrete Floor expense.

Accounting for major replacement

If the original part of an existing asset is separately identifiable, the major replacement = asset. The cost
of the replaced part and its related accumulated depreciation are removed from the accounts with any
remaining carrying value treated as a loss. If the carrying amount of the replaced part cannot be identified,
it may use the cost of the replacement as the “likely original cost” of the replaced part at the time it was
acquired or constructed.

Building = 4,000,000. Life = 20 years. After 10 Assume same data, but original cost cannot be
years, wooden roof with original cost of P300,000 determined. Discount rate is 6% and PV of 1 at 6%
is replaced with concrete costing P400,000. for 10 periods is 0.56 = (400k x 0.56)
Loss on retirement of building 150,000 Loss on retirement of building 112,000
Accumulated depreciation 150,000 Accumulated depreciation 112,000
Building 300,000 Building 224,000
Replacement: Replacement (same)
Building 400,000
Cash 400,000 Bldg (4M-224k+400k) – Accum Depn (2M-112k)
Bldg (4M-300k+400k) – Accum Depn (2M-150k)
New depreciation (10yrs): New depreciation:
Depreciation (4.1M – 1.85M) 225,000 Depreciation (4.176M – 1.888M) 228,800
Accum. Depreciation 225,000 Accum. Depreciation 228,800

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EXERCISES – to be discussed during online class or as video in FB

Intermediate Accounting 1: Valix Problems 25-13 to 25-13, 25-18 to 25-21

Valix Problems 29-4 to 29-7

ACTIVITY 11 – Submit your handwritten answers through Google Classroom

1. Jamison Company purchased the assets of Booker Company at an auction for P1,400,000. An
independent appraisal of the fair value of the assets is listed below:
Land P475,000 Equipment 525,000
Building 700,000 Trucks 850,000
Assuming that specific identification costs are impracticable and that Jamison allocates the purchase
price on the basis of the relative fair values, what amount would be allocated to each of the property,
plant and equipment items?

2. Timmons Company traded machinery with a book value of P185,000 and a fair value of P200,000. It
received in exchange from Lewis Company a machine with a fair value of P180,000 and cash of
P20,000. Lewis’s machine has a book value of P190,000. What amount of gain should Timmons
recognize on the exchange?

3. Iyan had an equipment costing P1,000,000 with accumulated depreciation of P200,000. The fair value
of said equipment is P950,000. This was exchanged with Xyzen Co. for another equipment with a fair
value of P1,100,000 plus cash payment of P150,000. What is Iyan’s journal entry to record the
exchange?

Compute for the cost of LAND, NEW BUILDING and LAND IMPROVEMENT for Blossom Company given
the following expenditures for the construction of a new home office:
Purchase price of land and an old apartment building 2,000,000 Fair value of land 1,800,000
Payment of land mortgage and interest due @ time of sale 50,000 Legal fees (title search) 10,000
Payment of delinquent property taxes assumed 20,000 Drainage on land 15,000
Cost of razing the apartment building 30,000 Architect fee 200,000
Interest cost on specific borrowing during construction 300,000 Payment to contractor 8,000,000
Payment of medical bills of employees accidentally injured 10,000 Paving parking lot 40,000
Trees, shrubs and other landscaping 55,000 Installing lights in driveway 5,000
Premium for insurance on building during construction 60,000 Open house party 60,000

2020-2021 Module Packets for AE 15 and ELEC 1 (Intermediate Accounting) | College of Commerce |
University of San Agustin, Iloilo City, 5000, Philippines Page 14 of 14