A company purchased equipment for P5,000,000 on January 1, 20X8. The equipment had a useful life of five (5) years with no residual value. On December 31, 20X8, the entity classified the equipment as held for sale. On such date, the fair value less cost of disposal of the equipment was P3,500,000. On December 31, 20X9, the entity believed that the criteria for classification as held for sale could no longer be met. Accordingly, the entity decided not to sell the equipment but to continue to use it. On December 31, 20X9, the fair value less cost of disposal of the equipment was P2,700,000. 1. What is the carrying amount of the equipment on December 31, 20X8 before it was classified as held for sale? 2. What amount should be recognized as impairment loss in 20X8? 3. What amount should be included in profit or loss in 20X9 as a result of the reclassification of the equipment to property, plant, and equipment? 4. What is the adjusted carrying amount of the equipment on December 31, 2X20?

A company purchased equipment for P5,000,000 on January 1, 20X8. The equipment had a useful life of five (5) years with no residual value. On December 31, 20X8, the entity classified the equipment as held for sale. On such date, the fair value less cost of disposal of the equipment was P3,500,000. On December 31, 20X9, the entity believed that the criteria for classification as held for sale could no longer be met. Accordingly, the entity decided not to sell the equipment but to continue to use it. On December 31, 20X9, the fair value less cost of disposal of the equipment was P2,700,000. 1. What is the carrying amount of the equipment on December 31, 20X8 before it was classified as held for sale? 2. What amount should be recognized as impairment loss in 20X8? 3. What amount should be included in profit or loss in 20X9 as a result of the reclassification of the equipment to property, plant, and equipment? 4. What is the adjusted carrying amount of the equipment on December 31, 2X20?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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