An entity purchased an equipment for P5,000,000 on January 1, 2020. The equipment had a useful life of 5 years with no residual value. On December 31, 2020, 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, 2021, the entity believed that the criteria for classification as held for sale can no longer be met. Accordingly, the entity decided not to sell the equipment but to continue to use it. On December 31, 2021, the fair value less cost of disposal of the equipment was P2,700,000.What amount should be included in profit or loss in 2021 as a result of the classification? *

An entity purchased an equipment for P5,000,000 on January 1, 2020. The equipment had a useful life of 5 years with no residual value. On December 31, 2020, 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, 2021, the entity believed that the criteria for classification as held for sale can no longer be met. Accordingly, the entity decided not to sell the equipment but to continue to use it. On December 31, 2021, the fair value less cost of disposal of the equipment was P2,700,000.What amount should be included in profit or loss in 2021 as a result of the classification? *

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

On January 1, 2019, Villanueva Company classified noncurrent assets as held for sale that had a carrying amount of P2,500,000. On this date, the assets are expected to be sold for P2,300,000. Reasonable disposal cost to be incurred upon sale was expected at P100,000. As of December 31, 2019, the asset had not been sold. After considering its options, management decided to put back the noncurrent asset for use in operations. On that date, Villanueva's financial managers estimated the noncurrent asset was now expected to be selling at P1,800,000 with the disposal cost of P50,000, while depreciation for 2019 was computed at P500,000 if the noncurrent asset was not classified as held for sales. At how much should the asset be recorded upon reclassification as "held for use" on December 31, 2019 A. 2,500,000 B. 2,200,000 C. 2,000,000 D. 1,950,000
On December 31, 2022, ALR, Inc. classified one of its plant assets (land) as held for sale. The carrying value of the land as of that date was $2,000,000. The fair value less selling costs on that date was $1,800,000. As of December 31, 2023, the company had not sold the asset, so it was still classified as held for sale. fair value net of selling costs as of December 31, 2023, was $2,050,000. Based on this information, indicate how ALR should report the asset on the December 31, 2022, and December 31, 2023, balance sheets. Prepare any journal entries required. Begin by recording the journal entry to reclassify the land held for sale on December 31, 2022. (Record debits first, then credits. Exclude explanations from any journal entries. If no entry is required select "No Entry Required" on the first line of the journal entry table and leave all remaining cells in the table blank.) Аccount December 31. 2022 Now, record the journal entry to write down the asset on December 31, 2022.…
ABC has an asset that was classified as held for sale at 31 March 2019. The asset had a carryingamount of P900 and a fair value of P800. The cost of disposal was estimated to be P50.According to PFRS 5 Non-current Assets Held for Sale and Discontinued Operations, whichvalue should be used for the asset as at 31 March 2019? * P750 P800 O P850 P900
Lure Corporation is using the cost model for noncurrent assets. On October 1, 2020, the entity classified a noncurrent asset as held for sale. At that date, the carrying amount was P4,500,000, the fair value was estimated at P3,300,000, and the cost of disposal at P450,000. On October 25, 2020, the asset was sold for net proceeds of P2,400,000. What amount should be reported as loss on disposal for the year ended December 31, 2020? P750,000 P1,650,000 P450,000 P2,100,000
Clara Company purchased equipment for P5,000,000 on January 1, 2021 with a useful life of 10 years and no residual value. On December 31, 2022, the entity classified the asset as held for sale. The fair value of the equipment on December 31, 2022 is P3,300,000 and the cost of disposal is P100,000. On December 31, 2023 , the fair value of the equipment is P3,800,000 and the cost of disposal is P200,000. On December 31, 2023, the entity believed that the criteria for classification as held for sale can no longer be met. Accordingly, the entity decided not to sell the assets but to continue to use it. What amount should be recognized as gain on reclassification of the equipment in 2023?
Wednesday Company purchased equipment for P8,000,000 on January 1, 2023 with a useful life of 10 years and no residual value. on December 31, 2024, Wednesday classified the equipment as held for sale. The fair value of the equipment on December 31, 2024 was P6,000,000 and the cost of disposal P200,000. On December 31, 2025, Wednesday believed that the criteria for classification as held for sale can no longer be met. On such date, the fair value of the equipment was P5,000,000 and the cost of disposal was P100,000. The value in use was determined to be P5,500,000. Accordingly, the entity decided not to sell the asset but to continue to use it. What is the impairment loss to be recognized on December 31, 2024?
Wildhorse Corporation acquired End-of-the-World Products on January 1, 2020 for $6250000, and recorded goodwill of $1170000 as a result of that purchase. At December 31, 2021, the End-of-the-World Products Division had a fair value of $4580000. The net identifiable assets of the Division (including goodwill) had a carrying value of $5290000 at that time. What amount of loss on impairment of goodwill should Wildhorse record in 2021?
On January 1, 2019, Melody Company entered, as a lessor, into a five-year non-cancelable operating lease of a building it completed constructing earlier that day at a cost of P8, 000, 000. The building has an economic life of 60 years and nil residual value, The company accounts for the building as property, plant and equipment using the cost model because the fair value of the property cannot be determined reliably without undue cost or effort on an ongoing basis. No lease amount is payable for the fırst four years of the lease. The single lease payment of P1,500,000 is due on January 1, 2019. What amount of unearned rental should Melody Company recognize on January 1, 2023?
On January 1, 2021, Smith Company sold a piece of machinery to Gaby Company for P1,900,000. Because of the entity's commitments to its customers to provide their needs for the next three years, Smith Company simultaneously leased back the machinery. The transfer of the asset to the buyer qualifies to be accounted for as a sale under IFRS 15. Information relating to this transaction follows: Fair value of machinery - P2,200,000 Carrying amount of machinery - P1, 700,000 Remaining useful life of the machinery - 8 years Lease term - 3 years Annual rent payable at the end of each year beginning, December 31, 2021- P500,000 Market rate of interest - 10% The present value of an ordinary annuity of 1 at 10% for 3 periods is 2.4869 The present value of an annuity due of 1 at 10% for 3 periods is 2.7355 1. How much is the interest expense for 2021 on the lease liability relating to the right retained in the sale-leaseback transaction? (round off your final answer to the nearest peso value)…
On July 1, 2020, Sheffield Ltd., a publicly listed company, acquired assets from Bramble Ltd. On the transaction date, a reliable, independent valuator assessed the fair values of these assets as follows: Manufacturing plant (building #1) $399,580 Storage warehouse (building #2) 209,940 Machinery (in building #1) 74,700 Machinery (in building #2) 45,000 The buildings are owned by the company, and the land that the buildings are situated on is owned by the local municipality and is provided free of charge to the owner of the buildings to encourage local employment.In exchange for the acquisition of these assets, Sheffield issued 145,750 common shares. Sheffield’s shares are thinly traded (that is, traded in relatively low volume leading to more volatile price changes than most public companies). In the most recent sale of Sheffield’s shares on the Toronto Stock Exchange, 510 shares were sold for $5 per share. At the time of acquisition, both buildings were…
NATO Company accounted for noncurrent assets using the revaluation model. On July 1, 2021, the entity classified an equipment as held for sale. At that date, the carrying amount was P1,900,000 and the balance of the revaluation surplus was P200,000. On July 1, the fair value was estimated at P1,800,000 and the cost of disposal at P100,000. On December 31, 2021, the fair value was estimated at P2,000,000 and the cost of disposal is P200,000. What is the amount of impairment loss to be reported for 2021?
On december 31 2021, an equipment was classified as held for sale. Its fair value less cost to sell was 6,000,000 while the equipments carrying value on this date was 5,800,000. At what amount will current assets increqse due to this transaction?