On January 1, 2021, Brandy Company owned a group of machines with the following aggregate cost and accumulated depreciation: Machinery Accumulated depreciation 90,000,000 25,000,000 The machines have an average remaining useful life of 4 years and it has been determined that this group of machines constitutes a cash generating unit. The fair value less cost of disposal of this group of machines in an active market is determined to be P48,000,000. Based on supportable and reasonable assumptions, the financial forecast for this group of machines reveals the following cash inflows and cash outflows for the next four years: Cash inflows Cash outflows 2021 2022 2023 2024 30,000,000 32,500,000 27,500,000 16,000,000 12,000,000 17,500,000 12,500,000 4,000,000 It is believed that a discount rate of 8% is reflective of time value of money. The table of present value shows the following present value of 1 at 8%: Perind Present value of 1 .930 .857 .794 .735 1 2 3 Required: 1. Determine the value in use. 2. Determine the recoverable amount. 3. Prepare journal entry to record the impairment loss, if any nocord the denregiotio
On January 1, 2021, Brandy Company owned a group of machines with the following aggregate cost and accumulated depreciation: Machinery Accumulated depreciation 90,000,000 25,000,000 The machines have an average remaining useful life of 4 years and it has been determined that this group of machines constitutes a cash generating unit. The fair value less cost of disposal of this group of machines in an active market is determined to be P48,000,000. Based on supportable and reasonable assumptions, the financial forecast for this group of machines reveals the following cash inflows and cash outflows for the next four years: Cash inflows Cash outflows 2021 2022 2023 2024 30,000,000 32,500,000 27,500,000 16,000,000 12,000,000 17,500,000 12,500,000 4,000,000 It is believed that a discount rate of 8% is reflective of time value of money. The table of present value shows the following present value of 1 at 8%: Perind Present value of 1 .930 .857 .794 .735 1 2 3 Required: 1. Determine the value in use. 2. Determine the recoverable amount. 3. Prepare journal entry to record the impairment loss, if any nocord the denregiotio
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:machines with the following aggregate cost and accumulated
On January 1, 2021, Brandy Company owned a group of
Problem 32-3 (IFRS)
depreciation:
Machinery
Accumulated depreciation
90,000,000
25,000,000
The machines have an average remaining useful life of 4 years
and it has been determined that this group of machines
constitutes a cash generating unit.
The fair value less cost of disposal of this group of machines
in an active market is determined to be P48,000,000.
Based on supportable and reasonable assumptions, the
financial forecast for this group of machines reveals the
following cash inflows and cash outflows for the next four
years:
Cash inflows
Cash outflows
2021
2022
2023
2024
30,000,000
32,500,000
27,500,000
16,000,000
12,000,000
17,500,000
12,500,000
4,000,000
It is believed that a discount rate of 8% is reflective of time
value of money. The table of present value shows the following
present value of 1 at 8%:
Perind
Present value of 1
.930
.857
.794
.735
4
Required:
1. Determine the value in use.
2. Determine the recoverable amount.
3. Prepare journal entry to record the impairment loss, if any.
4. Prepare journal entry to record the depreciation for the
current year.
123
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