On January 1, 2015, a corporation purchased a factory for P3,600,000 and machinery for P5,000,000. The factory are being depreciated over 15 years and 10 years, respectively, using the straight-line method, to zero residual values. Late in 2020, because of technological advances in the industry and reduced selling prices for its products, the company believes that its asset(s) may be impaired and will have a remaining useful life of 8 years. The cash flows from the factory and machinery are not separable, and are independent of the company's other activities. The company estimates that the asset will produce cash inflows of P3,000,000 and will incur cash outflows of P1,495,000 each for the next 8 years. It is not able to determine the fair value of the asset based on a current selling price. Appropriate discount rate is determined to be 10%. Determine the impairment loss to be recorded by the corporation. O 2,389,000 O 2,251,000 O 2,142,000 O 2,107,000

On January 1, 2015, a corporation purchased a factory for P3,600,000 and machinery for P5,000,000. The factory are being depreciated over 15 years and 10 years, respectively, using the straight-line method, to zero residual values. Late in 2020, because of technological advances in the industry and reduced selling prices for its products, the company believes that its asset(s) may be impaired and will have a remaining useful life of 8 years. The cash flows from the factory and machinery are not separable, and are independent of the company's other activities. The company estimates that the asset will produce cash inflows of P3,000,000 and will incur cash outflows of P1,495,000 each for the next 8 years. It is not able to determine the fair value of the asset based on a current selling price. Appropriate discount rate is determined to be 10%. Determine the impairment loss to be recorded by the corporation. O 2,389,000 O 2,251,000 O 2,142,000 O 2,107,000

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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