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What amount shall be reclassified to retained earnings

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Question - Aish Co., a clothing manufacturer, purchased a sewing machine for P2,200,000 on July 1, 2016. The machine had a 8-year life, a P400,000 residual value, and was depreciated using the sum of years' digit. On January 1, 2019 a test for impairment indicates that the undiscounted cash flows from the sewing machine are less than its carrying value. The machine's fair value on January 1, 2019 is P500,000.

Required -

a. What is the loss on impairment?

b. What amount shall be reclassified to retained earnings?

Reference no: EM133024027

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