CP3 Corp. formalized an agreement with the government on January 1, 2021. The agreement states that the government will give CP3 P40,000,000 to construct an environment-friendly factory that will produce healthy food products. The agreement requires CP3 to sell its food products below market price for 10 years, which is equivalent to the useful life of the factory. Also, it was agreed that if the government catches CP3 selling its food products above market price, the entire amount of the grant given to CP3 will be returned to the government. CP3 finished the construction of the factory on January 1, 2021 for a total cost of P60,000,000. On January 1, 2022, CP3 was caught by the government selling its food products above market price. - How much is the net value of the factory if the Deduction from Asset Approach is used? - How much Loss on Repayment of the Grant will be recorded on January 1, 2022?
CP3 Corp. formalized an agreement with the government on January 1, 2021. The agreement states that the government will give CP3 P40,000,000 to construct an environment-friendly factory that will produce healthy food products. The agreement requires CP3 to sell its food products below market price for 10 years, which is equivalent to the useful life of the factory. Also, it was agreed that if the government catches CP3 selling its food products above market price, the entire amount of the grant given to CP3 will be returned to the government. CP3 finished the construction of the factory on January 1, 2021 for a total cost of P60,000,000.
On January 1, 2022, CP3 was caught by the government selling its food products above market price.
- How much is the net value of the factory if the Deduction from Asset Approach is used?
- How much Loss on Repayment of the Grant will be recorded on January 1, 2022?
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