Reference no: EM132982428
Question: HAWKINS CORP. purchased a delivery equipment for Php 5,000,000 on January 1, 2021. The equipment had a useful life of 5 years with no residual value. On December 31, 2021, HAWKINS classified the delivery equipment as held for sale as HAWKINS wants an immediate sale of the asset and there are potential buyers for the delivery van. On such date, the fair value of the delivery equipment is Php 3,600,000 and costs of disposal of Php 100,000. On December 31, 2022, HAWKINS believed that the criteria of for the classification as held for sale under PFRS 5 can no longer be met. Accordingly, HAWKINS decided not to sell the equipment but to continue to use it. On December 31, 2022, the fair value was Php 2,700,000 after deducting costs to sell of Php 50,000.
1. What is the carrying amount of the delivery equipment on December 31, 2021 before classification as held for sale?
2. What amount should be recognized as impairment loss in 2021?
3. What amount should be included in profit or loss in 2022 as a result of reclassification of the delivery equipment to property, plant and equipment?
4. What is the carrying amount of the delivery equipment on December 31, 2023?
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