Mr. Wonder purchased a machine amounting to P7,000,000 on January 1, 2013 providing the newest kind of technology to improve their operations. It has a useful life of 20 years and a salvage value of P500,000. However, on June 30, 2018, they decided to dispose it to liquidate some of its debts. Therefore, they classified it as held for sale. The fair value of the machine on that date P5,100,000 and the cost of disposal is P100,000. On November 30, 2019, the company decided again to continue to use it since they were able to obtain funding from their investors through follow-on offering of additional shares to pay their currently maturing obligations. On this date, the fair value of the machine is P4,900,000 and the cost of disposal is P50,000. How much is the gain or loss in the reclassification in 2019?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Mr. Wonder purchased a machine amounting to P7,000,000 on January 1, 2013 providing the
newest kind of technology to improve their operations. It has a useful life of 20 years and a
salvage value of P500,000. However, on June 30, 2018, they decided to dispose it to liquidate
some of its debts. Therefore, they classified it as held for sale. The fair value of the machine
on that date P5,100,000 and the cost of disposal is P100,000. On November 30, 2019, the
company decided again to continue to use it since they were able to obtain funding from their
investors through follow-on offering of additional shares to pay their currently maturing
obligations. On this date, the fair value of the machine is P4,900,000 and the cost of disposal
is P50,000. How much is the gain or loss in the reclassification in 2019?
Transcribed Image Text:Mr. Wonder purchased a machine amounting to P7,000,000 on January 1, 2013 providing the newest kind of technology to improve their operations. It has a useful life of 20 years and a salvage value of P500,000. However, on June 30, 2018, they decided to dispose it to liquidate some of its debts. Therefore, they classified it as held for sale. The fair value of the machine on that date P5,100,000 and the cost of disposal is P100,000. On November 30, 2019, the company decided again to continue to use it since they were able to obtain funding from their investors through follow-on offering of additional shares to pay their currently maturing obligations. On this date, the fair value of the machine is P4,900,000 and the cost of disposal is P50,000. How much is the gain or loss in the reclassification in 2019?
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