Reference no: EM132718605

Side Step Company purchased an equipment for P5,000,000 on January 1, 2022. The equipment has a useful life of 5 years with no residual value. On December 31, 2022, the entity classified the asset as held for sale. On such date, the fair value less cost to sell of the equipment is P3,500,000.

• On December 31, 2023, the entity believed that the criteria for classification as held for sale can no longer be met. Accordingly, the entity decided not to sell the asset but to continue to use it. On December 31, 2023, the fair value less cost to sell of the equipment is P2,700,000.

Problem 1: What amount of impairment loss should be recognized in 2022?

Problem 2: What amount should be included in profit or loss in 2023 as a result of the reclassification of the equipment to property, plant and equipment? (use negative sign if loss)

Problem 3: What is the depreciation for 2024?