4. ABC Company reported an impairment loss of P200,000 in its statement of comprehensive income for the year ended December 31, 20X0. This loss was related to noncurrent asset which ABC currently used in its operations. On the December 31, 20X0, ABC reported the noncurrent asset after impairment at P1,000,000 and estimated that the noncurrent asset would still be used for another five years regardless of whether the impairment was recognized or not. ABC used the straight-line depreciation with no residual value. On December 31, 20X1, ABC determined that the fair value of its impaired noncurrent asset had increased by P50,000 over its fair value on December 31, 20X0. In the 20X1 statement of comprehensive income, what amount should be reported as gain on the reversal of the impairment loss?
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
4. ABC Company reported an impairment loss of P200,000 in its statement of comprehensive income for the year ended December 31, 20X0. This loss was related to noncurrent asset which ABC currently used in its operations. On the December 31, 20X0, ABC reported the noncurrent asset after impairment at P1,000,000 and estimated that the noncurrent asset would still be used for another five years regardless of whether the impairment was recognized or not. ABC used the straight-line
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