Reference no: EM132944052

Questions -

Q1. On August 1, 2011, Wei Inc. purchased a license with a cost of P8,424,000 and a useful life of 10 years. At December 31, 2013, when the carrying value of the asset was P6,388,200, the company determined that impairment indicators were present. The fair less costs to sell the license was estimated to be P5,909,120. The asset's value-in-use is estimated to be P6,084,000. Wei's 2013 income statement will report Loss on Impairment of?

a. 304,200

b. 1,272,500

c. 299,425

d. 109,300

Q2. Daisy Tara planted a new vineyard in the year 2020 on a 150 acres of land that she leases for P30,000 a year. She has asked you as her accountant to assist her in determining the value of her vineyard operation as of January 1, 2021 given the following assumption on a 40-year lease. The vineyard will bear no grapes for the first 5 years (1-5). In the next 5 years (6-10), Daisy estimates that the vines will bear grapes that can be sold for P60,000 each year. For the next 20 years (11-30) she expects the harvest will provide annual revenues of P110,000. But during the last 10 years (31-40) of the vineyard's life, she estimates that the revenues will decline to P80,000 per year. During the first 5 years the annual cost of pruning, fertilizing, and caring for the vineyard is estimated at P9,000; during the years of production, 6-40 years, these cost will rise to P12,000 per year. The relevant market rate of interest for the entire period is 12%. Assume all receipts and payments are made at the end of each year. On the basis of the current value of business as of January 1, 2021, what are the net present values of the expected future cash flows for the following periods as of January 01, 2021?

a) 1-5 years

b) 6-10 years

c)  11-30 years

d)  30-40 years