Answered: How much is the gain (loss) as a result…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

A building was constructed and finished on January 1, 2014. The total cost is P8,600,000. It was estimated to last up to January 1, 2054 with a salvage value of P600,000. Depreciation is on a straight-line method. On February 1, 2017, repairs costing P50,000 were made on the building. The repairs did not increase the value nor the life of the building. During 2019, after the financial statements for 2018 have been issued, it was estimated that the building would last up to January 1, 2019 without any change in the estimated residual value. On December 31, 2019, the building was sold for P7,500,000.

How much is the gain (loss) as a result of the sale of the building?

A. P(100,000)

B. P(375,000)

C. P500,000

D. P133,333

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