Reference no: EM133073518

Questions -

Q1) Chuck Company operates an oil platform at the Pacific Ocean. An oil platform was built by the Company at a cost of P25,000,0000 on January 1, 2011, the present value of expected restoration costs at that time was P5,000,000. The oil platform has an estimated useful life of 20 years, with no residual value.On December 31, 2020, the Company was offered P18,000,000 to sell the platform. The selling costs would be P2,500,0000. The value in use of the platform is P13,000,000. How much is the impairment loss for the year 2020?

A. 2,500,000

B. None

C. 500,000

D. 2,000,000

Q2) On December 31, 2021, Purple Company sold a building, receiving as a consideration a P4,000,000 non-interest bearing note due in three years. The building costs P3,800,000 and the accumulated depreciation was P1,600,000 at the date of sale. The prevailing rate of interest for a note of this type was 12%. How much gain or loss should Purple report on the sale of the asset?

A. 988,776 loss

B. 1,800,000 gain

C. 988,776 gain

D. 647,121 gain

Q3) Maroon Company's depreciation policy on machinery and equipment is as follows:

-A full year's depreciation is take in the year of an asset's acquisition

-No depreciation is take in the year of an asset's disposition

-The estimated useful life is five years

-The straight-line method is used.

On June 30, 2021, Maroon sold for P230,000 a machine acquired in 2018 for P420,000. The accumulated depreciation was P216,000 at December 31, 2020, and the original estimated salvage value was P60,000. How much was the gain or loss on the disposal should Maroon record in 2021?