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Presented below is information related to equipment owned by King Cobra Company: Cost 9,000,000 Accumulated depreciation 1,500,000 Fair value less cost to sell 3,200,000 King Cobra Company will continue to use the asset for its remaining 5 year life, at the end of which it is expected to be sold at P500,000. Expected cash inflows from the use of the asset is P1,500,000, after incurring production costs including annual maintenance of P700,000. The appropriate discount rate is 10%. The present value: Single payment of 1 at 10% for 5 periods 0.6209 Ordinary annuity of 1 at 10% for 5 periods 3.7908 How much is the impairment loss? A . 4,156,910 B. 3,343,090 C. 568,618 D. 3,032,640

Presented below is information related to equipment owned by King Cobra Company: Cost 9,000,000 Accumulated depreciation 1,500,000 Fair value less cost to sell 3,200,000 King Cobra Company will continue to use the asset for its remaining 5 year life, at the end of which it is expected to be sold at P500,000. Expected cash inflows from the use of the asset is P1,500,000, after incurring production costs including annual maintenance of P700,000. The appropriate discount rate is 10%. The present value: Single payment of 1 at 10% for 5 periods 0.6209 Ordinary annuity of 1 at 10% for 5 periods 3.7908 How much is the impairment loss? A . 4,156,910 B. 3,343,090 C. 568,618 D. 3,032,640

FINANCIAL ACCOUNTING
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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Presented below is information related to equipment owned by King Cobra Company:
Cost 9,000,000
Accumulated depreciation 1,500,000
Fair value less cost to sell 3,200,000
King Cobra Company will continue to use the asset for its remaining 5 year life, at the end of which it is
expected to be sold at P500,000. Expected cash inflows from the use of the asset is P1,500,000, after
incurring production costs including annual maintenance of P700,000. The appropriate discount rate is
10%. The present value:
Single payment of 1 at 10% for 5 periods 0.6209
Ordinary annuity of 1 at 10% for 5 periods 3.7908
How much is the impairment loss?
A
.
4,156,910 B. 3,343,090 C. 568,618 D. 3,032,640

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