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What amount should be recognized as gain on reversal

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Reference no: EM132903035

On April 1, 2020, Brandy Company had a machine with a cost of P5,000,000 and accumulated depreciation of P3,750,000.

  • On April 1, 2020, the entity classified the machine as held for sale and decided to sell the machine within one year.
  • On April 1, 2020, the machine had an estimated selling price of P500,000 and a remaining useful life of two years.
  • It is estimated that the disposal cost of the machine will be P50,000.
  • On December 31, 2020, the estimated selling price of the machine has increased to P750,000 with estimated disposal cost of P100,000.

Problem 1: What is the impairment loss to be recognized in April 1, 2020?

a. 450,000

b. 800,000

c. 750,000

d. 0

Problem 2: What amount should be recognized as gain on reversal of impairment on Dec 31, 2020?

a. 468,750

b. 368,750

c. 300,000

d. 200,000

Reference no: EM132903035

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