In 2019, Lepanto Mining Company purchased property with natural resources for P28,000,000. The property had a residual value of P5,000,000. However, the entity is required to restore the property to the original condition at a discounted amount of P2,000,000. In 2019, the entity spent P1,000,000 in development cost and constructed a building on the property costing P3,000,000. The entity does not anticipate that the building will have utility after the natural resources are removed.

In 2019, Lepanto Mining Company purchased property with natural resources for P28,000,000. The property had a residual value of P5,000,000. However, the entity is required to restore the property to the original condition at a discounted amount of P2,000,000. In 2019, the entity spent P1,000,000 in development cost and constructed a building on the property costing P3,000,000. The entity does not anticipate that the building will have utility after the natural resources are removed.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Nona Co. purchased land worth P20,000,000 on January 1, 2021. The company uses the revaluation model in accounting for its PPE. On December 31, 2021, an independent appraiser valued the land at P43,000,000. But on December 31, 2022, the land had a fair value of P8,000,000. How much revaluation deficit/impairment loss should be recognized in the income statement on December 31, 2022?
On December 31, 2021, LJK Co. classified its building with a historical cost of P1,700,000 and accumulated depreciation of P1,020,000 as held for sale. All of the criteria under PFRS 5 are complied with. On that date, the land has a fair value of P525,000 and cost to sell of P35,000. 1. Assuming the building was not sold in 2022. However, the exception to the one year requirement was met. On December 31, 2022 the FV less cost to sell of the building is P470,000. What is the amount of impairment loss? 2. Assuming the building was not sold in 2023. However, the exception to the one year requirement was still met. On December 31, 2023 the FV less cost to sell of the building is increased to P515,000. What is the amount of cumulative impairment loss in 2023? 3. Assuming the building was not sold in 2023. However, the exception to the one year requirement was still met. On December 31, 2023 the FV less cost to sell of the building is increased to P515,000. What is the amount of gain on…
At the beginning of 2021, JOJO acquired a mine for P970,000. Of this amount, P100,000 was ascribed to the land value and the remaining portion to the minerals in the mine. Surveys conducted by geologists have indicated that approximately 12,000,000 units of ore appear to be in the mine. JOJO incurred P170,000 of development costs associated with this mine prior to any extraction of minerals. It also determined that the fair value of its obligation to prepare the land for an alternative use when all of the mineral has been removed was P40,000. During 2021, 2,500,000 units of ore were extracted and 2,100,000 of these units were sold. How much is the total amount of depletion for 2021?
On December 31, 2021, an entity has a building with cost of Rp500 million and accumulated depreciation of Rp250 million. The entity uses revaluation model on the building. The entity made a fair value adjustment to its building and recognized loss of Rp100 million on December 31, 2021. On January 5, 2022, the entity decided to lease out that owner-occupied building and transferred it to investment property using the fair value model. At the time of transfer, the fair value of the building was Rp280 million. The gain/loss recognized in profit or loss on the transfer will be a. gain of Rp130 million. O b. gain of Rp30 million. O .gain of Rp100 million. O d. loss of Rp130 million.
PLANT Ltd acquired a property on 1 January 2018 for its investment potential at a cost of GHS200,000. On acquisition, the property was estimated to have useful life of 40 years. PLANT adopted a policy of fair valuation for subsequent measurement. The fair value of the asset at 31 December 2019 was GHS 202,800. Effective 1 January 2019, management of PLANT decided to use the property as business premise. The original estimated useful life remained unchanged. Required: Account for the treatment of this property in the 2008 and 2009 financial statements of PLANT Ltd
Lure Corporation is using the cost model for noncurrent assets. On October 1, 2020, the entity classified a noncurrent asset as held for sale. At that date, the carrying amount was P4,500,000, the fair value was estimated at P3,300,000, and the cost of disposal at P450,000. On October 25, 2020, the asset was sold for net proceeds of P2,400,000. What amount should be reported as loss on disposal for the year ended December 31, 2020? P750,000 P1,650,000 P450,000 P2,100,000
P Ltd has two non-current assets: land and machinery at 30 June 2020. The carrying amount of land is $800,000 and machinery is $80,000 (cost $100,000 less accumulated depreciation $20,000). On 30 June 2020, P Ltd revalued both assets and the fair value land was $750,000 while fair value of machinery was $110,000. On 30 June 2021, fair value of land was $775,000 but the value of the machinery was unchanged. The tax rate is 30 percent. Required Provide the appropriate journal entries to record the revaluations of assets on 30 June 2020 to 30 June 2021.
Clara Company purchased equipment for P5,000,000 on January 1, 2021 with a useful life of 10 years and no residual value. On December 31, 2022, the entity classified the asset as held for sale. The fair value of the equipment on December 31, 2022 is P3,300,000 and the cost of disposal is P100,000. On December 31, 2023 , the fair value of the equipment is P3,800,000 and the cost of disposal is P200,000. On December 31, 2023, the entity believed that the criteria for classification as held for sale can no longer be met. Accordingly, the entity decided not to sell the assets but to continue to use it. What amount should be recognized as gain on reclassification of the equipment in 2023?