Xavier Company had three segments, A, B and C. Segment C is deemed inconsistent with the long-term direction of the entity. Management had decided to dispose of Segment C. On November 15, 2023, the board of directors voted to approve the disposal. On that date the carrying amount of Segment C's net assets was P90,000,000 and the fair value less cost of disposal was P70,000,000. Segment C's revenue and expenses for 2023, respectively, were P50,000,000 and P45,000,000, including an interest expense of P5,000,000 attributable to Segment C. There was no further impairment of assets between November 15 and December 31, 2023. The income tax rate is 25%. What amount of loss from discontinued operation should be reported for 2023? a. 15,000,000 b. 11,250,000 c. 10,000,000 d. 20,000,000

Xavier Company had three segments, A, B and C. Segment C is deemed inconsistent with the long-term direction of the entity. Management had decided to dispose of Segment C. On November 15, 2023, the board of directors voted to approve the disposal. On that date the carrying amount of Segment C's net assets was P90,000,000 and the fair value less cost of disposal was P70,000,000. Segment C's revenue and expenses for 2023, respectively, were P50,000,000 and P45,000,000, including an interest expense of P5,000,000 attributable to Segment C. There was no further impairment of assets between November 15 and December 31, 2023. The income tax rate is 25%. What amount of loss from discontinued operation should be reported for 2023? a. 15,000,000 b. 11,250,000 c. 10,000,000 d. 20,000,000

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter13: Property Transactions: Determination Of Gain Or Loss, Basis Considerations, And Nonta Xable Exchanges

Section: Chapter Questions

Problem 85P

See similar textbooks

Similar questions

Shellfish Company determined that, due to the obsolescence, equipment with an original cost of P180,000 and accumulated depreciation at January 1, 2020 of P84,000 had suffered permanent impairment, and as a result should have fair value of only P60,000 as of the beginning of the year. Additionally, the remaining useful life of the equipment was reduced from eight years to three years. If the company’s policy is to credit accumulated depreciation when a PPE is impaired, how much should selfless report as accumulated depreciation in its December 31, 2020 statement of financial position?
On January 1, 2022, Villanueva Company classified noncurrent assets as held for sale that had a carrying amount of P2,500,000. On this date, the assets are expected to be sold for P2,300,000. Reasonable disposal cost to be incurred upon sale was expected at P100,000. As of December 31, 2022, the asset had not been sold. After considering its options, management decided to put back the noncurrent asset for use in operations. On that date, Villanueva’s financial managers estimated the noncurrent asset was now expected to be selling at P1,800,000 with the disposal cost of P50,000, while depreciation for 2022 was computed at P500,000 if the noncurrent asset was not classified as held for sale. At how much should the asset be recorded upon reclassification as “held for use” on December 31, 2022?
During 2020, SBD closed facilities which were made redundant by the acquisition of Niscayah. Assume that they recognized a charge of $125 associated with closures during 2020 of which $50 was for severance and other benefits to be paid to employees during 2021 and 2022 (the employees were terminated in 2020) and $75 million was for impairment of the property, plant and equipment. $40 of the severance was paid in 2021, with the remainder to be paid in 2022. What journal entries would SBD have recorded in 2020 and 2021?
On December 31, 2021, Max Company committed to a plan to discontinue the operations of Underwear Division. The fair value of the facilities was P1,000,000 less than carrying amount on December 31, 2021. The division's operating loss for 2021 was P2,000,000 and the division was actually sold for P1,200,000 less than the carrying amount in 2022. The entity estimated that the division's operating loss for 2022 would be P500,000, The income tax rate is 30% What amount should be reported as loss from discontinued operation in 2021?
1. Determine the impairment loss, if any, to be recorded on December 31,2020 a) Assume that the fair Value of the Conchita Division is 41764000 instead of $1850000. Determine the impairment loss, if any, to be recorded on December 31,2020 b) Prepare the journal entry to record the impairment loss, if any, and indicate where loss would be reported in the income statement
On January 1, 2020, Elite Company purchased equipment with a cost of P11,000,000, useful life of 10 years and no residual value. The entity used straight line depreciation. At every year-end, the entity determined that impairment indicators are present. There is no change in the useful life or residual value. The following information is available for impairment testing: December 31, 2020: Fair Value less Cost of Disposal - P8,100,000 Value in Use - P8,550,000 December 31, 2021 Fair Value less Cost of Disposal - P8,400,000 Value in Use - P8,200,000 1. What is the impairment loss for 2020? 2. What is the gain on reversal of impairment for 2021? 3. What is the depreciation for 2022?
On January 1, 2021, Deer Company had a division that met the criteria for discontinuance of a business component. For the period January 1 through October 15, 2021, the component had revenue of P500,000 and expenses of P800,000. The assets of the component were sold on October 15, 2021 at a loss of P100,000. How should Deer report the component's operation for 2021?
On December 31, 2022, Delater Enterprises must measure its impairment loss for plant and equipment. Delater has determined that the broadcast license is not impaired. The projected future undiscounted cash flows, projected future discounted cash flows, and fair values of the plant and equipment are listed below: (Click the icon to view the cash flows and fair values.) Determine the impairment loss and the revised annual depreciation expense. Prepare any necessary journal entries to record the impairment. Begin by computing the impairment loss for the plant and equipment. (Use a minus sign or par Plant and Equipment Carrying value Less: Fair value Impairment Loss Next, prepare the journal entry necessary to record the impairment. (Record debits first, then c December 31, 2022 2,145,000 915,000 $ (2,145,000) 1,230,000 $ (915,000) Account Accumulated Depreciation Plant and Equipment Impairment Loss on Plant and Equipment Plant and Equipment Determine the revised annual depreciation…
On December 31, 2022, Belt Enterprises must measure its impairment loss for plant and equipment. Belt has determined that the broadcast license is not impaired. The projected future undiscounted cash flows, projected future discounted cash flows, and fair values of the plant and equipment are listed below: EEE (Click the icon to view the cash flows and fair values.) Determine the impairment loss and the revised annual depreciation expense. Prepare any necessary journal entries to record the impairment. Begin by computing the impairment loss for the plant and equipment. (Use a minus sign or parentheses for any loss amounts.) Plant and Equipment Less: Impairment Loss Next, prepare the journal entry necessary to record the impairment. (Record debits first, then credits. Exclude explanations from any jo December 31, 2022 Account Determine the revised annual depreciation expense. The annual depreciation expense is Data table Cost Less: Accumulated Depreciation/Amortization Carrying value…
PUP CAF Company reported an impairment loss of P2,000,000 in 2020. This loss was related to an item of property, plant, and equipment which was acquired on January 1, 2019, with cost of P10,000,000, useful life of 10 years and no residual value. On December 31, 2021, the entity determined that the fair value of the impaired asset had increased to P6,850,000. The straight-line method is used in recording depreciation and uses a cost model to account for its property, plant, and equipment. What amount of gain on reversal of impairment should be reported in the income statement for 2021?
Under IFRS 15, assuming the outcome of construction can be estimated reliably, what is the realized gross loss to be recognized by MDC for the year ended December 31, 20x22? On July 1, 20x31, Torela Company, a construction company, entered into a contract to construct a commercial building for a customer on customer-owned land for promised consideration of P1,000,000 and a bonus of P200,000 if the building is completed within 24 months. An inception date, the entity expects total construction costs of P700,000 to complete the building. The entity accounts for the promised bundle of goods and services as a single performance obligation satisfied over time in accordance with paragraph IFRS 15 because the customer controls the building during construction. At contract inception, the entity cannot conclude that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur with respect to inclusion of bonus to contract price. Completion…
Affable Company purchased an equipment for P5,000,000 on January 1, 2020. The equipment had a useful life of 5 years with no residual value. On December 31, 2020, the entity classified the equipment as held for sale. On such a date, the fair value less cost of disposal of the equipment was P 3,500,000. On December 31, 2021, the entity believed that the criteria for classification as held for sale can no longer be met. Accordingly, the entity decided not to sell the equipment but to continue to use it. On December 31, 2021, the fair value less cost of disposal of the equipment was P2,700,000 Required:1. Compute the carrying value of the equipment on December 31, 2020 before reclassification as held for sale.2. Compute the amount of impairment loss in 20203. Compute the amount to be included in profit or loss in 2021 as a result of the reclassification of the equipment to property, plant and equipment4. Compute the depreciation of the equipment for 20225.Compute the adjusted carrying…