You are a newly-hired accountant of the Aguamenti Company, having been hired on August 31, 2009. However, shortly after you have acquired knowledge of the business' systems and accounts, you have discovered the following omissions and errors perpetrated in the past years (the Company uses a fiscal year period ending August 31):

1). Last March 31, 2005, the Company bought a service vehicle for P150,000 cash. It was initially estimated to have a useful life of 10 years, with P10,000 salvage value at the end of its life. However, on the date of acquisition, the past accountant recorded it as Office Tools and Supplies (a current asset account). As of September 23, 2009 (the date today), the Office Tools and Supplies account has a balance of P150,000, representing the amount of the service vehicle that was incorrectly recorded.

I'm confuse about this... ^__^

[QUOTE=anxhei27;1991094]You are a newly-hired accountant of the Aguamenti Company, having been hired on August 31, 2009. However, shortly after you have acquired knowledge of the business' systems and accounts, you have discovered the following omissions and errors perpetrated in the past years (the Company uses a fiscal year period ending August 31):

1). Last March 31, 2005, the Company bought a service vehicle for P150,000 cash. It was initially estimated to have a useful life of 10 years, with P10,000 salvage value at the end of its life. However, on the date of acquisition, the past accountant recorded it as Office Tools and Supplies (a current asset account). As of September 23, 2009 (the date today), the Office Tools and Supplies account has a balance of P150,000, representing the amount of the service vehicle that was incorrectly recorded.

: ) I got it! :)

You have to first transfer the vehicle out of your current asset to your PP&E account, then you have to calculate the amount of depreciation that should have been recorded to date, then post this amount to the Depreciation Expense and Accumulated Depreciation accounts.