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What is the carrying value of the asset of december

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Q1. On January 1, 2017, Jungkook Company purchased an equipment for P1,970,000. On this date, the equipment has an estimated economic useful life of 12 years and estimated residual value of P98,000. It is the company's policy to depreciate this type of equipment using a sum-of-years digit. On January 1, 2021, Jungkook Company made a review of the estimated useful life and salvage value of the equipment and review revealed that the asset has a revised total life of 14 years and a residual value of P100,000. The company also changed the method of depreciation to straight-line. What is the carrying value of the asset of December 31, 2022?

a. P875,800

b. P865,800

c. P769,600

d. P789,600

Q2. Company A had a machine with a carrying amount of P450,000. Company B had a delivery vehicle with a carrying amount of P300,000. Companies A and B exchanged the machine and vehicle, and Company B paid an additional P90,000 cash as part of the exchange. Assume that fair value of delivery vehicle is P420,000. If the exchange has commercial substance, how much gain or loss should be recorded by Company A?

a. P60,000 gain

b. P120,000 gain

c. P120,000 loss

d. P30,000 loss

Reference no: EM133149117

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