Reference no: EM132817314

Questions -

Q1. Salientes Company purchased an equipment for P6,000,000 on January 1, 2019. On December 21. 2019, the equipment was classified as held for sale. On such date, the fair value less cost of disposal of the equipment was P4,000,000. On December 31, 2020, 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 equipment but to continue to use it. On December 31, 2020, the fair value less cost of disposal of the equipment was P2,500,000. The useful life of the equipment is 5 years.

a. What is the carrying amount of the equipment on December 31, 2019 before classification as held for sale?

b. What amount of impairment loss should be recognized in 2019?

c. What amount should be included in profit or loss in 2020 as a result of the reclassification of the equipment to property, plant and equipment?

d. What is the adjusted carrying amount of the equipment on December 31, 2021?

Q2. De Vera Company reported the following data for the current year:

-Income from continuing operations, P700,000

-Net Income, P500,000

-Selling and administrative expenses, P2,250,000

-Income before income tax, P1,000,000What amount should be reported as income or loss from discontinued operations?

Q3. Mendoza Company committed to sell the computer division, a component of the business, on August 1, 2019. The carrying amount of the division was P4,000,000 and the fair value was P3,500,000. The disposal date is expected on July 1, 2020. The division reported an operating loss of P200,000 for the year ended December 31, 2019.

Before income tax, what amount should be reported as loss from discontinued operation in 2019?