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    Prob 4-10 To 12

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    maryani
    1. Petron Company purchased an oil depot for P6,000,000 on January 1, 2020 which is depreciated over 5 years. The estimated cost to decommission the depot is P1,500,000 with a discount rate of 10%. On December 31, 2024, the depot was dismantled for P1,700,000. 2. Stanford Company purchased a mining site for P8,000,000 on January 1, 2020 with an estimated restoration cost of P2,000,000 over 10 years with an 8% discount rate. On December 31, 2029, the site was restored for P1,800,000. 3. Camille Company purchased a detox

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    Prob 4-10 To 12

    Uploaded by

    maryani
    151 views2 pages
    1. Petron Company purchased an oil depot for P6,000,000 on January 1, 2020 which is depreciated over 5 years. The estimated cost to decommission the depot is P1,500,000 with a discount rate of 10%. On December 31, 2024, the depot was dismantled for P1,700,000. 2. Stanford Company purchased a mining site for P8,000,000 on January 1, 2020 with an estimated restoration cost of P2,000,000 over 10 years with an 8% discount rate. On December 31, 2029, the site was restored for P1,800,000. 3. Camille Company purchased a detox

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    Prob 4-10 to 12

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    1. Petron Company purchased an oil depot for P6,000,000 on January 1, 2020 which is depreciated over 5 years. The estimated cost to decommission the depot is P1,500,000 with a discount rate of 10%. On December 31, 2024, the depot was dismantled for P1,700,000. 2. Stanford Company purchased a mining site for P8,000,000 on January 1, 2020 with an estimated restoration cost of P2,000,000 over 10 years with an 8% discount rate. On December 31, 2029, the site was restored for P1,800,000. 3. Camille Company purchased a detox

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    151 views2 pages

    Prob 4-10 To 12

    Uploaded by

    maryani
    1. Petron Company purchased an oil depot for P6,000,000 on January 1, 2020 which is depreciated over 5 years. The estimated cost to decommission the depot is P1,500,000 with a discount rate of 10%. On December 31, 2024, the depot was dismantled for P1,700,000. 2. Stanford Company purchased a mining site for P8,000,000 on January 1, 2020 with an estimated restoration cost of P2,000,000 over 10 years with an 8% discount rate. On December 31, 2029, the site was restored for P1,800,000. 3. Camille Company purchased a detox

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Problem 4-10 (IAA)

    sed on oil tanker


    On January 1, 2020. Petron Company purchased on oil + depot at a cost of P6,000,000.
    et for 5 years after
    d to open to disuks.
    mantle the depot and
    The entity is expected to operate the depot for 5 years a which it is legally required to
    disma remove the underground storage tanks.
    The oil tanker depot is depreciated using straight line wi no residual value.

    It is reliably estimated that the cost of decommissioning the depot will amount to
    P1,500,000.
    The appropriate discount rate is 10%. The present value of 1 at 10% for 5 periods is
    0.62.
    On December 31, 2024, after 5 years of operating the depot, the entity paid a demolition
    entity to dismantle the depot at a price of P1,700,000.
    Required:
    1. Prepare journal entries in 2020 in relation to the depot
    and the decommissioning liability.
    2. Prepare journal entries to record the derecognition of
    the depot and the settlement of the decommissioning liability on December 31, 2024.

    Problem 4-11 (AA)


    On January 1, 2020, Stanford Com
    Stanford Company purchased a mining site that will have to be restored to certain
    specifications when the mining production ceases
    The cost of the mining site is P8,000,000 and the restoration cost is expected to be
    P2,000,000.
    It is estimated that the mine will continue in operation for
    10 years.
    The appropriate discount rate is 8%. The present value of 1 at 8% for 10 periods is
    0.4632.
    On December 31, 2029, the entity contracted with another entity for the restoration of
    the mining site in accordance with specifications at a cost of P1,800,000.
    Required:
    1. Prepare journal entries in 2020 to record the purchase
    of the mining site and the recognition of the decommissioning liability.
    2. Prepare journal entry to record the settlement of the
    decommissioning liability on December 31, 2029.

    Problem 4-12 (IAA)

    On January 1, 2020, Camille Company purchased detoxification facility for P9,000,000.


    ion caused by timated to be
    The cost of cleaning up the routine contamination cau the initial location of gas on the
    property is estimated
    P1,500,000.
    of the existing the facility is
    This cost will be incurred in 10 years when all of the exis stockpile of gas is detoxified
    and the facility decommissioned
    Additional contamination may occur in succeeding years that the facility is in operation.
    On January 1, 2022, additional contamination clean up cost is estimated at P200,000.
    The appropriate discount rate is 6%.
    The present value of 1 at 6% is 0.63 for 8 periods and 0.56 for 10 periods.
    Ort December 31, 2029, the entity paid a contractor an amount of P2,000,000 for the
    decommissioning of the detoxification facility.
    Required:
    1. Prepare journal entries in 2020 in relation to the
    detoxification facility and the decommissioning liability:
    2. Prepare journal entries in 2022 in relation to the
    detoxification facility and decommissioning liability.
    3. Prepare journal entries on December 31, 2029 to le
    the derecognition of the detoxification facility at settlement of the decommissioning
    liability.
    29 to record acility and the

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