Reference no: EM132816575

On March 31, 2019, Mill Company classified a building as a non-current asset held for sale. Immediately before the classification as held for sale, the carrying amount of the building is P1,250,000 (cost of P5,000,000 and accumulated depreciation of P3,750,000). The building is depreciated on the straight line method with remaining useful life of 2 years. The estimate of the fair value on this date is 1,000,000 while the estimate of the cost to sell is P50,000.

• On December 31, 2019, the estimate of the fair value is revised to P850,000 while the estimate of the cost to sell is P30,000.
• On April 1, 2020, Mill believed that the criteria for classification as held for sale can no longer be met. Accordingly, Mill decided not to sell the building but to continue to use it. The fair value less cost to sell and the value in use of the building are P850,000 and P900,000, respectively.

Problem 1: What amount of impairment loss should HP company recognize at the date the asset was classified as held for sale?

Problem 2: At what amount should the building be recorded/reclassified on April 1, 2019 as property, plant and equipment?

Problem 3: How much is the depreciation expense for 2020 after the asset was reclassified back to property, plant and equipment?

Problem 4: What amount of impairment loss should HP company recognize at the date the asset was classified as held for sale?