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How is the profit during the year of sale addected

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Reference no: EM132811067

A building owned and previously occupied by the company was vacated and 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 P20, 000, 000 and accumulated deprecation of P12, 000, 000. The fair value of the building is P9, 000, 000. The company expects to incur selling costs of P1, 500, 000 on the disposal of this building.

Assume that the building was sold after the end of the reporting period at P9, 200, 000 after incurring disposal cost of P1, 300, 000.

Problem 1: How is the profit (before income tax) during the year of sale addected?

A. No effect
B. Decrease of P100, 000
C. Increase of P200, 000
D. Increase of P400, 000

Reference no: EM132811067

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