Reference no: EM132959357

On June 30, 2029, Netflix Enterprises decided to dispose of its manufacturing plant located in Tarlac. The plant is carried at cost of P 5,000,000, with accumulated depreciation of P 2,000,000 at December 31, 2028. Depreciation on the plant since it was acquired has been consistently provided at P 400,000 per year. The company outsourced the operations of the plant and undertook all the necessary actions to be able to classify the asset as held for sale. Netflix estimated that it could sell the plant at its fair value of P 2,500,000 after incurring estimated selling costs of P 200,000.

• On December 31, 2029, the plant had not been sold, but market conditions indicated that there had been an increase in the fair value to P 2,700,000.
• On February 1, 2030, Netflix was able to sell the plant for P 2,750,000. The company paid disposal costs of P 220,000.

Problem 1: How much is gain on recovery should be recognized on December 31, 2029?

Problem 2: How much is gain is to be recognized on the sale on February 1, 2030?

Problem 3: How much impairment loss, if any, is to be recognized in profit or loss on June 30, 2029?