Problem: Recognition and Measurement in Interim Periods Athena Corp. reports profit before tax of P 1,000,000 I its 2nd quarter interim financial statements before consideration for the following: Inventory with a carrying amount of P 100,000 has a net realizable value of P 80,000. It is expected that the decline in value will reverse in the 3rd An investment property measured under the cost model has a carrying amount of P 250,000 but its recoverable amount is P 210,000. An investment in FVPL measured at acquisition cost of P 20,000 has a fair value of P 25,000 as at the end of the 2nd However, the increase in fair value is expected to be only temporary. No depreciation is recognized during the 2nd The annual depreciation under the straight-line method of items of PPEs is P 360,000. Athena Corp. has a policy of providing 12 days paid vacation leaves for its employees. The vacation leaves are vesting and accumulating. Total paid vacation leaves eligibility of employees for the full year is P 240,000. However, only P 30,000 worth of paid vacation leave have been availed of during the quarter. It was discovered that depreciation in the previous year was overstated by P 9,000. REQUIRED: Compute for the adjusted profit before tax.

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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Problem: Recognition and Measurement in Interim Periods

Athena Corp. reports profit before tax of P 1,000,000 I its 2^nd quarter interim financial statements before consideration for the following:

Inventory with a carrying amount of P 100,000 has a net realizable value of P 80,000. It is expected that the decline in value will reverse in the 3^rd
An investment property measured under the cost model has a carrying amount of P 250,000 but its recoverable amount is P 210,000.
An investment in FVPL measured at acquisition cost of P 20,000 has a fair value of P 25,000 as at the end of the 2^nd However, the increase in fair value is expected to be only temporary.
No depreciation is recognized during the 2^nd The annual depreciation under the straight-line method of items of PPEs is P 360,000.
Athena Corp. has a policy of providing 12 days paid vacation leaves for its employees. The vacation leaves are vesting and accumulating. Total paid vacation leaves eligibility of employees for the full year is P 240,000. However, only P 30,000 worth of paid vacation leave have been availed of during the quarter.
It was discovered that depreciation in the previous year was overstated by P 9,000.

REQUIRED: Compute for the adjusted profit before tax.

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