In January 2015, Genesis Company purchased equipment at a cost of P 5,000,000. The equipment had an estimated residual value of P 1,000,000, an estimated 8- year useful life, and was being depreciated by the straight line method. Two- years later, it became apparent that this equipment suffered a permanent impairment of value. In January 2017, management determined the carrying amount should be only P1,750,000 with a 2 year remaining useful life, and the residual value should be reduced to P 250,000. What is the impairment loss for 2016?
In January 2015, Genesis Company purchased equipment at a cost of P 5,000,000. The equipment had an estimated residual value of P 1,000,000, an estimated 8- year useful life, and was being depreciated by the straight line method. Two- years later, it became apparent that this equipment suffered a permanent impairment of value. In January 2017, management determined the carrying amount should be only P1,750,000 with a 2 year remaining useful life, and the residual value should be reduced to P 250,000. What is the impairment loss for 2016?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
12.
A.3,250,000
B.3,750,000
C.2,250,000
D.4,000,000
![In January 2015, Genesis Company purchased equipment at a cost of P 5,000,000.
The equipment had an estimated residual value of P 1,000,000, an estimated 8- year
useful life, and was being depreciated by the straight line method.
Two- years later, it became apparent that this equipment suffered a permanent
impairment of value.
In January 2017, management determined the carrying amount should be only
P 1,750,000 with a 2 year remaining useful life, and the residual value should be
reduced to P 250,000.
What is the impairment loss for 2016?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc449f03c-cd02-4294-8690-616874bd2d88%2F6d8e0095-e198-4786-b230-17b8a4d536da%2F6t1qdo_processed.png&w=3840&q=75)
Transcribed Image Text:In January 2015, Genesis Company purchased equipment at a cost of P 5,000,000.
The equipment had an estimated residual value of P 1,000,000, an estimated 8- year
useful life, and was being depreciated by the straight line method.
Two- years later, it became apparent that this equipment suffered a permanent
impairment of value.
In January 2017, management determined the carrying amount should be only
P 1,750,000 with a 2 year remaining useful life, and the residual value should be
reduced to P 250,000.
What is the impairment loss for 2016?
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