Reference no: EM133111576
Question 1 - Pocholo Company reported an impairment loss of P512,000 in its income statement for the year 2016. This loss was related to a building that was acquired on January 1, 2008 with a cost of P4,000,000 (no residual value). Depreciation on the building is computed on a straight-line basis and annual depreciation on cost is P160,000. Depreciation for the year 2017 was computed based on the asset's recoverable amount at December 31, 2016.
On December 31, 2021, the entity decided to measure its building using revaluation model. This building was then appraised to a fair value of P2,100,000.
What amount of gain on impairment recovery should Pocholo report in its 2021 income statement?
a. 128,000
b. 352,000
c. 512,000
d. 692,000
Question 2 - The Mark Company acquired a helicopter in 2018. At the time of acquisition, the cost of the jet frame was P32 million and the additional cost of the engine was P3.0 million.
In 2021, the engine was replaced with a new one costing P5,000,000. At the time of replacement, the accumulated depreciation to date on the jet frame was P8,750,000 and on the engine was P2,000,000.
Using the principles outlined in IAS 16, Property, Plant and Equipment, what amount should be derecognized at the date of replacement?
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