Reference no: EM132971375
Question - On June 1, 2018, Starr Company had an equipment with a cost of P10,000,000 and accumulated depreciation of P7,500,000. On the same date, the entity classified the equipment as held for sale and decided to sell it within one year. The equipment had an estimated selling price of P2,000,000 and a remaining useful life of 4 years. It is estimated that selling cost associated with the disposal of the equipment will be P200,000.
On December 31, 2018, the estimated selling price of the equipment had increased to P2,300,000 with estimated cost of disposal of P250,000.
1. What amount of impairment loss should be recognized on June 1, 2018?
A. 700,000 B. 500,000 C. 300,000 D. 0
2. What amount should be recognized as gain on reversal of impairment on December 31, 2018?
A. 700,000 B. 512,500 C. 250,000 D. 0
3. Assuming the estimated selling price of the equipment on December 31, 2018 had increased to P2,800,000 with estimated cost of disposal of P200,000, what amount should be recognized as gain on reversal of impairment on December 31, 2018?
A. 1,062,500 B. 962,500 C. 800,000 D. 700,000
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