Reference no: EM133161729
Question - The financial statements of Kare-Kare Company for the calendar year ending December 31, 2021 are authorized for issue on March 30, 2022. Income before tax was computed at P50,000,000 before the following events occurred in the company:
a. The company had investments in shares held for trading which were recorded at the fair value of P600,000 on December 31, 2021. During the period up to March 1, 2022, there was a steady decline in the fair value of all the shares in the portfolio, and on March 1, 2022, the fair value had fallen to P500,000.
b. A customer owing the company P300,000 filed for bankruptcy on February 2, 2022. The company included in its financial statements an allowance for doubtful accounts pertaining to this customer of P100,000.
c. A shipping vessel of the company with a carrying amount of P10,000,000 was destroyed at sea because of the missile fired by the Russian army which accidentally hit the vessel on March 5, 2022.
d. A factory machinery with carrying amount of P700,000 was destroyed on December 30, 2021. The company recorded a loss of P200,000 and claims receivable from the insurance company of P500,000 on December 31, 2021. On February 1, 2022, an investigation revealed that the machinery was destroyed due to the negligence of the operator which resulted to the forfeiture of insurance claims.
Required - What amount should be reported as income before tax in the financial statements?
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