Reference no: EM132913556

Question - On December 31, 2019, one of the CGU's of A Company was assessed to be impaired. The carrying amount of the assets of the unit were as follows as of this date:

Cash 100,000

Inventory 400,000

Receivables 200,000

Allowance for estimated credit losses 25,000

PPE: Building 2,100,000

Accumulated depreciation (acquired 3 years ago) 900,000

PPE: Equipment 1,100,000

Accumulated depreciation (annual depreciation P225,000) 200,000

Goodwill 75,000

The value in use of the CGU was determined to be P2,675,000. The receivables are considered to be collectible up to its carrying amount.

During 2020, in relation to the impairment, the company increased depreciation charges of the building and equipment to P325,000 and P250,000, respectively. The beginning inventory on hand were completely sold during the year. There were no outstanding receivables at the end of 2020.

At December 31, 2020, the company assessed the recoverable amount of the CGU to be P150,000 greater than its carrying amount.

Required - Determine carrying amount of PPE as of December 31, 2020.