Reference no: EM133180956

Question - Topic - retained earnings and SFP - The draft financial statements of Bergs Company for the year ended December 31, 2022 are currently under consideration by the directors. The net asset for the year is shown as P3,500,000. Since December 31, 2022 the following events have occurred but have been reflected in any way in the draft financial statements to that date.

Item 1- A substantial quantity of slow-moving inventory was sold for P320,000. The inventory had cost P600,000 and had been valued for the accounts on December 31, 2022 at its estimated net realizable value of P400,000.

Item 2- A trade receivable paid the amount owning P130,000 in full. At December 31, 2022 there were doubts as to whether it would be paid and a specific provision for the full amount had been made in the accounts.

What is the adjusted amount of net asset should Bergs Company report in its December 31, 2022 statement of financial position?

On January 1, 2017, Bergs Corporation acquired equipment at a cost of P600,000. Bix adopted the double-declining balance method of depreciation for this equipment and had been recording depreciation over an estimated life of eight years, with no residual value. At the beginning of 2020, a decision was made to change to the straight-line method of depreciation for this equipment. Assuming a 30% tax rate, the cumulative effect of this accounting change on beginning retained earnings, net of tax, is?