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What amount of gain or loss should Matt Company recognize

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Q1) On January 1, 2020, Lily Company had capitalized cost of P15,000,000 for a new computer software product with an economic life of 5 years. Sales for 2020 for the software product amounted to P5,000,000. The total sales of the software over its economic life are expected to be P20,000,000. However, the pattern of future sales from the computer software cannot be determined reliably.

In its 2020 income statement, Lily should record the amortization of computer software at

a. P0

b. P3,000,000

c. P2,000,000

d. P3,750,000

Q2) Matt Company, a property developer, completed the development of 50 units of the office building Dark for sale. Upon the completion of Dark, 5 units remain unsold and classified as inventories. The cost of these remaining units is P1,750,000 per unit whilst the net selling price is P2,000,000 per unit. Management subsequently decides to hold the units as investment property by letting out to tenants. What amount of gain or loss should Matt Company recognize on the transfer of inventories to investment property?.

a. P250,000

b. P1,750,000

c. P1,250,000

d. P2,000,000

Reference no: EM132934756

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