What is the depreciation expense of the equipment for 2023?what is the recoverable amount of the equipment on december 31, 2022how much is the impairment loss to be reported for 2022?what is the carrying value of the equipment on dec 31 2022 prior to impairment testing?show solution Read each problem carefully and choose the CORRECT answer among the choices.PROBLEM:On January 1, 2020, Chambers Company purchased an equipment for P2,500,000. The equipment wasestimated to have a useful life of 8 years from date of acquisition and a residual value of P250,000. It isthe company's policy to depreciate all of its property, plant and equipment using the straight-line method.On December 31, 2022, the company tested the equipment for possible impairment. The companydetermined the following information on December 31, 2022:P300,000 per yearUndiscounted net cash inflowsFair value of the equipmentEstimated cost of disposalDiscount rateP1,400,000P100,0008%There have been no changes in the initial estimates of the useful life and residual value.The PV factors are as follows:PV factor of 1 at 8% for 5 periods0.6806PV factor of 1 at 8% for 8 periods0.5403PV factor of ordinary annuity of 1 at 8% for 5 periods3.9927PV factor of ordinary annuity of 1 at 8% for 8 periods5.7466

An asset is said to be impaired if carrying amount of an asset is higher than the recoverable…

What is the depreciation expense of the equipment for 2023? what is the recoverable amount of the equipment on december 31, 2022 how much is the impairment loss to be reported for 2022? what is the carrying value of the equipment on dec 31 2022 prior to impairment testing? show solution

What is the depreciation expense of the equipment for 2023? what is the recoverable amount of the equipment on december 31, 2022 how much is the impairment loss to be reported for 2022? what is the carrying value of the equipment on dec 31 2022 prior to impairment testing? show solution

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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Question

What is the depreciation expense of the equipment for 2023?

what is the recoverable amount of the equipment on december 31, 2022

how much is the impairment loss to be reported for 2022?

what is the carrying value of the equipment on dec 31 2022 prior to impairment testing?

show solution

Read each problem carefully and choose the CORRECT answer among the choices.
PROBLEM:
On January 1, 2020, Chambers Company purchased an equipment for P2,500,000. The equipment was
estimated to have a useful life of 8 years from date of acquisition and a residual value of P250,000. It is
the company's policy to depreciate all of its property, plant and equipment using the straight-line method.
On December 31, 2022, the company tested the equipment for possible impairment. The company
determined the following information on December 31, 2022:
P300,000 per year
Undiscounted net cash inflows
Fair value of the equipment
Estimated cost of disposal
Discount rate
P1,400,000
P100,000
8%
There have been no changes in the initial estimates of the useful life and residual value.
The PV factors are as follows:
PV factor of 1 at 8% for 5 periods
0.6806
PV factor of 1 at 8% for 8 periods
0.5403
PV factor of ordinary annuity of 1 at 8% for 5 periods
3.9927
PV factor of ordinary annuity of 1 at 8% for 8 periods
5.7466

Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video

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