Reference no: EM133180995

Questions -

Q1. Knowl Company plans to dispose of a group of net assets that form part of a disposal group. The net assets on December 31, 2020 are (at carrying value):

Goodwill - P6,000,000; PPE - P18,000,000; Inventory - P10,000,000; Financial Assets (profit of P2,000,000 recognized in equity) - P7,000,000; Financial liabilities - P4,000,000; Total Net Assets - P37,000,000.

Before the date of reclassification, the PPE has a fair value of P26,000,000; the inventory has a net realizable value of P9,000,000. The fair value less cost to sell of the disposal group is P25,000,000. What amount of the impairment is allocated to the inventory?

Q2. On October 1, 2021, Knowl Company has a building with a cost of P4,000,000 and accumulated depreciation of P3,100,000. The company commits to a plan to sell the building by Feb. 1, 2022. On October 1, 2021, the building has an estimated selling price of P800,000 and it estimated that selling costs associated with the disposal of the building will be P120,000. On December 31, 2021, the estimated selling price of the building has increased to P1,200,000 with estimated selling costs remaining at P120,000. What amount of loss should Knowl Company recognize at the time the building was reclassified as held for sale?