Reference no: EM133188243
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. Knowie Company owned 50,000 ordinary shares of Bergs Company. These 50,000 shares were purchased by KNOWIE for P100 per share and classified as FVOCI. Knowie was entitled to buy one new share of Bergs Company for P80 cash and 4 of these rights. On August 30, Bergs distributed 50,000 share rights to Knowie and on this date, the market value per share is P120 and the market value per right is P30.
What total cost should be recognized for the new shares that are acquired by exercising the rights?
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