Ermon Company determined that its electronics division is a cash generating unit. The entity calculated the value in use of the division at P8,000,000. The carrying amounts of the assets are: Building P5,000,000; Equipment - P3,000,000; and Inventory - P2,000,000. The entity also determined that the fair value less cost of disposal of the building is P4,500,000. What is the impairment loss to be allocated to the equipment? A. 1,000,000 B. 900,000 C. 600,000 D. 400,000

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Ermon Company determined that its electronics division is a cash generating unit. The entity calculated the value in
use of the division at P8,000,000. The carrying amounts of the assets are: Building P5,000,000; Equipment -
P3,000,000; and Inventory - P2,000,000. The entity also determined that the fair value less cost of disposal of the
building is P4,500,000. What is the impairment loss to be allocated to the equipment?
A. 1,000,000
B. 900,000
C. 600,000
D. 400,000
Transcribed Image Text:Ermon Company determined that its electronics division is a cash generating unit. The entity calculated the value in use of the division at P8,000,000. The carrying amounts of the assets are: Building P5,000,000; Equipment - P3,000,000; and Inventory - P2,000,000. The entity also determined that the fair value less cost of disposal of the building is P4,500,000. What is the impairment loss to be allocated to the equipment? A. 1,000,000 B. 900,000 C. 600,000 D. 400,000
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