Use the following information for the next two questions: On January 1, 20x1, Entity A acquires a building to be held as investment property for a total cost of P1,500,000. The building is estimated to have a 30-year useful life and a 5% residual value. Entity A uses the straight-line method of depreciation. On December 31, 20x5, Entity A determines that the building is impaired and makes the following estimates: Fair value less costs to sell P900,000 Value in use P1,000,000 Following the impairment, Entity A revises its estimate of residual value to 5% of the recoverable amount. 9. How much is the impairment loss on December 31, 20x5? a. 226,500 b. 326,500 c. 257,500 d. 262,500
Use the following information for the next two questions: On January 1, 20x1, Entity A acquires a building to be held as investment property for a total cost of P1,500,000. The building is estimated to have a 30-year useful life and a 5% residual value. Entity A uses the straight-line method of depreciation. On December 31, 20x5, Entity A determines that the building is impaired and makes the following estimates: Fair value less costs to sell P900,000 Value in use P1,000,000 Following the impairment, Entity A revises its estimate of residual value to 5% of the recoverable amount. 9. How much is the impairment loss on December 31, 20x5? a. 226,500 b. 326,500 c. 257,500 d. 262,500
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Show me the solution of no. 9 and 10 thanksss...
Transcribed Image Text:Use the following information for the next two questions:
On January 1, 20x1, Entity A acquires a building to be held as investment property for a total
cost of P1,500,000. The building is estimated to have a 30-year useful life and a 5% residual
value. Entity A uses the straight-line method of depreciation.
On December 31, 20x5, Entity A determines that the building is impaired and makes the
following estimates:
Fair value less costs to sell
P900,000
Value in use
P1,000,000
Following the impairment, Entity A revises its estimate of residual value to 5% of the recoverable
amount.
9. How much is the impairment loss on December 31, 20x5?
a. 226,500
b. 326,500
c. 257,500
d. 262,500
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Transcribed Image Text:10. On December 31, 2x10, Entity A determines an indication that the impairment loss
recognized in the prior period may no longer exist. Entity A makes the following estimates
and computations:
Fair value less costs to sell
P1,100,000
Value in use
P1,050,000
How much is the gain on the reversal of impairment?
a. 215,000
b. 290,000
c. 75,000
d. 218,000
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