Reference no: EM132972261

Question - Zany Company purchased four convenience store buildings on January 1, 2014 for a total of P25,000,000.

The buildings have been depreciated using the straight line method with a 20-year useful life and 10% residual value.

On January 1, 2020, the entity has converted the buildings into a hotel and restaurant.

The entity estimated that the buildings have a remaining useful life of 10 years , that their residual value will be zero, that net cash inflows from the buildings will total P1,500,000 per year, and that the fair value less cost of disposal of the four buildings totals P10,000,000.

The appropriate discount rate is 12%. The present value of an ordinary annuity of 1 at 12% for 10 periods is 5.65.

Required - Compute the values in use, impairment loss and depreciation for the current year.