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What amount should be recognized in profit or loss as result

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Reference no: EM132817744

Mara Company purchased equipment for P5,000,000 on January 1, 2017 with a useful life of 10 years and no residual value.

  1. On January 1, 2019, the entity classified the asset as held for sale. The fair value of the equipment on January 1, 2019 is P3,300,000 and the cost of disposal is P100,000.
  2. On December 31, 2019, the fair value of the equipment is P3,800,000 and the cost of disposal is P200,000
  3. On December 31, 2019, 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 continue to use it.

Problem 1: What is the measurement of the equipment that ceases as held for sale on December 31, 2019?

a. 3,200,000

b. 4,000,000

c. 3,500,000

d. 3,600,000

Problem 2: What amount should be recognized in profit or loss as result of reclassification in 2019?

a. 800,000

b. 300,000

c. 400,000

d. 0

Reference no: EM132817744

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