ACCOUNTING POLICY:
Property and equipment
Property and equipment are initially measured at its cost and subsequently measured at cost less any
accumulated depreciation and any accumulated impairment losses.
The initial cost of property and equipment comprises of its purchase price and any costs directly attributable
to bringing the asset to the location and condition necessary for it to be capable of operating in the manner
intended by management.
A part of some items of property and equipment may require replacement at regular interval. The entity
decides not to add to the carrying amount of an item of property and equipment the cost of replacing part
of such an item when that cost is incurred if the replacement part is expected not to provide incremental
future benefits to the entity.
The entity derecognises an item of property and equipment on disposal, or when no future economic
benefits are expected from its use or disposal. The entity recognises the gain or loss on derecognition of an
item of property, plant and equipment in profit or loss when the item is derecognised. The entity does not
classify such gains as revenue. The entity determines the gain or loss arising from derecognition of an item
of property, plant and equipment as the difference between the net disposal proceeds, if any, and the
carrying amount of the item.
Depreciation is computed using the straight-line method over the estimated useful lives of the property and
equipment. The estimated useful life is as follows:
Store equipment and improvements
Transportation equipment
Furniture and fixtures
Communication equipment
Leasehold improvement
Useful Life in Years
2 years
4-5 years
1-2 years
2 years
5 years
The useful life and depreciation method are reviewed periodically to ensure that the period and the method
of depreciation are consistent with the expected pattern of economic benefits from items of property and
equipment.
10. PROPERTYAND EQUIPMENT
No. 4 (replacement of roof with identified original cost of roof)
Property and equipment consist of the following:
2007
Building
12.31.2006
2,500,000
Additions
250,000
Derecognition
(200,000)
12.31.07
2,550,000
Less Accumulated depreciation:
Building
1,250,000
140,000
(100,000)
1,290,000
110,000
(100,000)
1,260,000
Net carrying
amount
1,250,000
No. 5 (replacement of roof with unidentified original cost of roof)
Property and equipment consist of the following:
2007
Building
12.31.2006
2,500,000
Additions
250,000
Derecognition
(250,000)
12.31.07
2,500,000
Less Accumulated depreciation:
Building
1,250,000
137,500
(125,000)
1,262,500
112,500
(125,000)
1,237,500
Revaluation
4,000
12.31.07
12,000
1,000
3,000
3,000
9,000
Revaluation
1,000
12.31.07
9,000
(2,000)
0
3,000
9,000
Net carrying
amount
1,250,000
No. 6 (with revaluation using proportional method)
Property and equipment consist of the following:
2007
Machinery
12.31.2006
8,000
Additions
Less Accumulated depreciation:
Machinery
2,000
Net carrying
amount
6,000
(with revaluation using elimination method)
Property and equipment consist of the following:
2007
Machinery
12.31.2006
8,000
Less Accumulated depreciation:
Machinery
2,000
Net carrying
amount
6,000
Additions
No. 7 (with increase and decrease in revaluation)
Property and equipment consist of the following:
2005
Equipment
12.31.2004
5,000
Additions
Less Accumulated depreciation:
Equipment
2,000
Net carrying
amount
2006
Equipment
3,000
12.31.2005
8,000
2007
Equipment
4,000
12.31.2006
8,000
2008
Equipment
3,200
12.31.2007
8,000
1,200
4,000
(800)
4,200
4,000
2,400
Revaluation
12.31.06
8,000
800
4,800
(800)
3,200
Revaluation
12.31.07
8,000
800
5,600
(800)
2,400
Additions
Less Accumulated depreciation:
Equipment
5,600
Net carrying
amount
800
Additions
Less Accumulated depreciation:
Equipment
4,800
Net carrying
amount
12.31.05
8,000
Additions
Less Accumulated depreciation:
Equipment
4,000
Net carrying
amount
Revaluation
3,000
Revaluation
(4,500)
12.31.08
3,500
350
(3,150)
2,800
(350)
(1,350)
700
No. 8 (with decrease and increase in revaluation)
Property and equipment consist of the following:
2005
Land
12.31.2004
5,000
Additions
Revaluation
(1,000)
12.31.05
4,000
2008
Land
12.31.2007
4,000
Additions
Revaluation
1,500
12.31.08
5,500
No. 9 (with impairment)
Property and equipment consist of the following:
2006
Equipment
12.31.2005
1,200,000
Additions
Less Accumulated depreciation:
Equipment
640,000
Net carrying
amount
560,000
Impairment
12.31.06
1,200,000
72,025
199,875
911,900
72,025
199,875
288,100
11. Income tax expense and income tax payable
Income tax computation
Profit per books
Add:
Depreciation of revaluation
Taxable profit
Tax rate
Tax due
P269,491
214,164
483,655
30%
145,097