[Anonymous]

On September 2, 2017, LABAN had a new machine delivered and installed in its new factory. The cost of this
machine was ₱97,000 and the machine is being depreciated on a straight-line method over an estimated useful
life of 10 years. When the new machine was installed, LABAN paid for the following items which were not
included in the cost of the machine but were charged to repairs and maintenance:
Delivery expense ₱ 6,000
Installation costs 17,000
Cost of repairing the item due to minor damages because of mishandling the machine. 5,000

What is the correct carrying value of the company’s machinery as of December 31, 2017?

[SONA]

I think the answer is 116000 Carrying value on December 31, 2017.

97000+6000+17000 = 120000/10 x 4/12 = 4000
120000-4000 = 116000

Let me know the answer.

[Anonymous]

Thank you so much! I'll let you know the answer once I've confirmed it with my professor.

Can you also help me with this one?

LABAN adopted a pension plan on January 2, 2017, for eligible employees to be administered by a trustee. Based
upon actuarial computation, the actual normal pension cost was ₱70,000 and the present value of past service
cost on that date was ₱900,000, one-third of which vested immediately while the rest shall vest over the
remaining service life. On December 31, 2017, LABAN remitted to the trustee ₱970,000 and charged this amount
to the account “pension expense”. Employees were estimated to have a 20 years of average remaining service
life.

What is the prepaid pension cost / (accrued pension cost) as of December 31, 2017?

[SONA]

PSC will be amortized with remaining service life i.e. 900000/20 = 45000

Since Pension cost is calculated after taking into consideration PSC amortization, So Pension cost given by the actuarial 70000 should include PSC amortization. No need to add 45000 again to the pension cost.

1st answer pension cost is given already in the question 70000.
2nd answer There will be no accrued, becoz Co. contributed $970000. There will be prepaid pension cost of 900000.

Let me know, if this is the answer. I am also curious.

[Lara]

Is this using IFRS or US GAAP?

[noclady]

Just curious…are you a Filipino student learning US GAAP? The reason I'm asking is you're using the currency symbol for Philippine Peso.

[Author]

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