The carrying amount of Building C on December 31, 2020 is P8,000,000 and had remaining useful life of 25 years. It is the company's policy to depreciate all its buildings using the straight-line method. On January 2, 2021, Chamber Company committed a plan to sell Building C and classified this asset as held for sale. Building C was priced at P8,500,000, which is equal to its fair market value. During 2021, the market conditions that existed at the date the building was classified initially as held for sale deteriorated because of the prevailing worldwide pandemic and as a result, the asset is not sold at the end of 2021. During 2021, the company actively solicited but did not receive any reasonable offers to purchase the building and, in response, reduced the price to P8,400,000. The building continues to be actively marketed at a price that is reasonable given the change in market conditions. In 2022, the market conditions deteriorated further, and the building is yet to be sold by the end of 2022. Chamber Company believes that the market conditions will improve and has not further reduced the price of the building. The building continues to be held for sale at a price in excess of its current fair value. Because of the optimistic forecast in market conditions, the firm ceased to actively market the building to potential buyers. The recoverable amount at this time is estimated to be P8,350,000. In Chamber Company's December 31, 2022 Statement of Financial Position, at what amount should Building C be reported as property, plant and equipment?
The carrying amount of Building C on December 31, 2020 is P8,000,000 and had remaining useful life of 25 years. It is the company's policy to depreciate all its buildings using the straight-line method. On January 2, 2021, Chamber Company committed a plan to sell Building C and classified this asset as held for sale. Building C was priced at P8,500,000, which is equal to its fair market value. During 2021, the market conditions that existed at the date the building was classified initially as held for sale deteriorated because of the prevailing worldwide pandemic and as a result, the asset is not sold at the end of 2021. During 2021, the company actively solicited but did not receive any reasonable offers to purchase the building and, in response, reduced the price to P8,400,000. The building continues to be actively marketed at a price that is reasonable given the change in market conditions. In 2022, the market conditions deteriorated further, and the building is yet to be sold by the end of 2022. Chamber Company believes that the market conditions will improve and has not further reduced the price of the building. The building continues to be held for sale at a price in excess of its current fair value. Because of the optimistic forecast in market conditions, the firm ceased to actively market the building to potential buyers. The recoverable amount at this time is estimated to be P8,350,000. In Chamber Company's December 31, 2022 Statement of Financial Position, at what amount should Building C be reported as property, plant and equipment?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The carrying amount of Building C on December 31, 2020 is P8,000,000 and had
remaining useful life of 25 years. It is the company's policy to depreciate all its buildings
using the straight-line method.
On January 2, 2021, Chamber Company committed a plan to sell Building C and
classified this asset as held for sale. Building C was priced at P8,500,000, which is
equal to its fair market value.
During 2021, the market conditions that existed at the date the building was classified
initially as held for sale deteriorated because of the prevailing worldwide pandemic and
as a result, the asset is not sold at the end of 2021. During 2021, the company actively
solicited but did not receive any reasonable offers to purchase the building and, in
response, reduced the price to P8,400,000. The building continues to be actively
marketed at a price that is reasonable given the change in market conditions.
In 2022, the market conditions deteriorated further, and the building is yet to be sold by
the end of 2022. Chamber Company believes that the market conditions will improve
and has not further reduced the price of the building. The building continues to be held
for sale at a price in excess of its current fair value. Because of the optimistic forecast in
market conditions, the firm ceased to actively market the building to potential buyers.
The recoverable amount at this time is estimated to be P8,350,000.
In Chamber Company's December 31, 2022 Statement of Financial Position, at what
amount should Building C be reported as property, plant and equipment?
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