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?
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?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
how much Loss on Repayment of the Grant will be recorded on January 1, 2022?
Transcribed Image Text: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?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 2 images
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education