An entity purchased equipment for P5,000,000 on January 1, 2020 with a useful life of 10 years and no residual value. On December 31, 2021, the entity classified the asset as held for sale. The fair value less cost of disposal of the equipment on December 31, 2021 is P3,200,000. On December 31, 2022, the fair value less cost of disposal of the equipment is P3,600,000. requirement: What amount should be recorded as a debit to equipment on January 1, 2020 What amount should be recorded to remove the asset from property, plant and equipment and classify it as held for sale on December 31, 2021
An entity purchased equipment for P5,000,000 on January 1, 2020 with a useful life of 10 years and no residual value. On December 31, 2021, the entity classified the asset as held for sale. The fair value less cost of disposal of the equipment on December 31, 2021 is P3,200,000. On December 31, 2022, the fair value less cost of disposal of the equipment is P3,600,000. requirement: What amount should be recorded as a debit to equipment on January 1, 2020 What amount should be recorded to remove the asset from property, plant and equipment and classify it as held for sale on December 31, 2021
Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization
Section: Chapter Questions
Problem 37P
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Question
An entity purchased equipment for P5,000,000 on January 1, 2020 with a useful life of 10 years and no residual value. On December 31, 2021, the entity classified the asset as held for sale. The fair value less cost of disposal of the equipment on December 31, 2021 is P3,200,000. On December 31, 2022, the fair value less cost of disposal of the equipment is P3,600,000.
requirement:
- What amount should be recorded as a debit to equipment on January 1, 2020
- What amount should be recorded to remove the asset from property, plant and equipment and classify it as held for sale on December 31, 2021
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