Reference no: EM132944033

Questions -

Q1. Factor Company's cash generating unit has been assessed for impairment and it has been determined that the unit has incurred an impairment loss of P240,000. The carrying amounts of the assets were as follows: Building P6,000,000; Land P3,500,000; Equipment P2,000,000; Vehicles P2,500,000. The cash generating unit has not recorded goodwill. How much of impairment loss should be allocated to the building?

a. P50,000

b. P62,500

c. P87,500

d. P102,857

Q2. MM Co. operates an oil platform in the sea. The firm has received an offer to buy the oil platform for P32,000,000 and the cost to sell would be P6,000,000. The value-in-use of the oil platform is approximately P28,000,000. The carrying value of the oil platform is P40,000,000. What amount of impairment loss should MM Co. recognize in relation to the oil platform?

a. P0

b. P8,000,000

c. P10,000,000

d. P12,000,000

e. none of the above

Q3. TAKDER Co. purchased four convenience store buildings on January 1, 2014, for a total of P22,000,000. The buildings have been depreciated using the straight-line method with a 20-year useful life and 5 % residual value. As of January 1, 2021, TAKDER Co. has converted the buildings into Internet Learning Centers. Because of the change in the use of the buildings, TAKDER Co. is evaluating the buildings for possible impairment. The firm estimates that the buildings have a remaining useful life of 10 years, that their residual value will be zero and net cash inflow from each building will be P500,000 per year and the appropriate pre-tax discount rate that reflects current market assessments of time value of money is 12%. Net selling price on the four buildings is not clearly determinable. What amount of impairment loss, if any, should be recognized?

a. None

b. P3,385,000

c. P4,435,000

d. P5,560,000

e. None of the above