Reference no: EM132933182

Questions -

Q1) Leo 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 asset as held for sale. On such date, the fair value less cost of disposal of the equipment was P3,500,000.

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 asset but to continue to use it. On December 31, 2021, the fair value less cost of disposal of the equipment was P2,700,000.

What is the impairment loss in 2020?

a. P1,000,000

b. P500,000

c. P0

d. P1,500,000

Q2) XYZ Company vacated a building which it owned and previously occupied. The building was being negotiated for sale. The sale is highly probable and is expected to be consummated within 6 months. The building had a cost of P28,000,000 and accumulated depreciation of P16,800,000. The fair value of the building less expected disposal costs is P12,600,000 wherein the expected selling costs is P2,100,000 on the disposal of this building.

Assuming that at year-end the property was not yet sold, at what amount should this asset be measured on the company's statement of financial position?

a. P10,500,000

b. P28,000,000

c. P12,600,000

d. P11,200,000