Reference no: EM133180954

Question - a. The following information was obtained from the statement of financial position of Aqua Inc. on December 31, 2019: 6% convertible 10-year bonds at par- P2,000,000; Ordinary share capital, P20 par, 110,000 shares issued and outstanding-P2,200,000; retained earnings P950,000. Each of the P1,000 bond can be converted into 40 ordinary shares. On September 30, 2020, the bonds were all converted into ordinary shares. Aqua reported a net income of P600,000 in 2020. The income tax rate is 30%. How much is the basic earnings per share in 2020?

b. On January 1, 2015, Entity Aqua purchased a machine for P2,750,000. The machine was depreciate using the sum of years' digits method based on a useful life of 10 years with no residual value. After one year of using the machine, the entity changed to straight line method of depreciation as a result of new information and more experience. What is the carrying amount of the machine at the end of 2020?

c. State company purchased an equipment worth 100,000 at the beginning of 2018. The equipment has an estimated useful life of 5 years and salvage value of 5,000. During the 2019 year-end audit, it was found that no depreciation was recorded since the acquisition.

The company uses double declining method in depreciating its PPES. The net amount that should be taken to retained earnings to correct the balance should be (income tax rate of 30%).