On June 30, 2022, L Company classified a non-current asset as “Held for Sale.” On this date, before its reclassification, its carrying amount was P5,000,000 and its expected selling price was P4,500,000, with expected cost to sell of P300,000. By December 31, 2022, the asset had not yet been sold, but the management is still committed to a plan to sell it, and the sale is considered to be highly probable. The entity estimated that because of recent changes for the demand of the product that is produced by the asset and expected favorable price movement, the asset was now expected to be selling at P5,500,000 with related cost to sell unchanged. Depreciation from July 1 to December 31 would have been P500,000. What amount of gain shall be recognized at December 31, 2022 as a result of the increase in the fair value less cost to sell of the asset?
On June 30, 2022, L Company classified a non-current asset as “Held for Sale.” On this date, before its reclassification, its carrying amount was P5,000,000 and its expected selling price was P4,500,000, with expected cost to sell of P300,000. By December 31, 2022, the asset had not yet been sold, but the management is still committed to a plan to sell it, and the sale is considered to be highly probable. The entity estimated that because of recent changes for the demand of the product that is produced by the asset and expected favorable price movement, the asset was now expected to be selling at P5,500,000 with related cost to sell unchanged. Depreciation from July 1 to December 31 would have been P500,000. What amount of gain shall be recognized at December 31, 2022 as a result of the increase in the fair value less cost to sell of the asset?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On June 30, 2022, L Company classified a non-current asset as “Held for Sale.” On this date, before its reclassification, its carrying amount was P5,000,000 and its expected selling price was P4,500,000, with expected cost to sell of P300,000.
By December 31, 2022, the asset had not yet been sold, but the management is still committed to a plan to sell it, and the sale is considered to be highly probable. The entity estimated that because of recent changes for the demand of the product that is produced by the asset and expected favorable price movement, the asset was now expected to be selling at P5,500,000 with related cost to sell unchanged. Depreciation from July 1 to December 31 would have been P500,000.
What amount of gain shall be recognized at December 31, 2022 as a result of the increase in the fair value less cost to sell of the asset?
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