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Determine gain to be recognized on the sale

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Question - On January 1, 2020, A Company decided to sell one of its machineries with a cost of P3,600,000 and accumulated depreciation of P640,000. Depreciation was P480,000 per annum.

The company undertook all necessary actions to be able to classify the asset as held for sale. It is estimated that the machine can be sold for its fair value of P2,880,000, incurring P80,000 selling costs in the process.

On March 31, 2020, the machine was not yet sold, and there was an increase in fair value to P3,080,000. Estimates of selling costs are unchanged.

On June 30, 2020, A Company was able to sell the plant for P3,140,000 after incurring P100,000 in selling costs.

Required - Determine gain (loss) to be recognized on the sale of machinery on June 30, 2020.

Reference no: EM132912182

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