Topics: Depreciation, Generally Accepted Accounting Principles, Costs Pages: 1 (331 words) Published: March 18, 2013
Instruction: Solve the following systematically. Box all your final answers. Unboxed answers will be considered incorrect. Use 2 decimal places. 1. A consortium of international telecommunication companies contracted for the purchased and installation of a fiber optic cable linking two major cities at a total cost of US $960 million. Thus amount includes freight and installation charges estimated at 10% of the above contract price. If the cable shall be depreciated over a period of 15 years with zero salvage value, what is the depreciation charge and the book value after the 8th year using a) SLM; b) DBM; c) DDBM; d) SYMD.

2. A certain machinery costs Php50,000, last 12 years with a salvage value of Php5,000. If the owner decides to sell it after using it for 5 years, what should his price be so that he will not lose or gain financially in the transaction?

3. A broadcasting corporation purchased equipment for Php53,000 and paid Php1,500 for freight and delivery charges to the job site. The equipment has a normal life of 10 years with a trade-in value of Php5,000 against the purchase of a new equipment at the end of the life. Determine the depreciation and book value at the end of 6th year using a) SLM; b) DBM; c) DDBM; d) SYMD.

4. The cost of a certain asset is Php3,000; its life is 6 years and a scrap value of Php500. Find the annual rate of depreciation under constant percentage method. Compute the depreciation at the end of 4 years using a) DBM; b) DDBM.

5. Determine the rate of depreciation, the total depreciation up to the end of the 8th year and the book value that he end of 8 years for an asset that costs Php15,000 new and has an estimated scrap value of Php2,000 at the end of 10 years by a) SLM; b) DBM; c) DDBM; d) SYMD.
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