Reference no: EM132851174
An entity has determine that one of its cash-generating units (CGUs) has sustained an impairment loss of P50,000. The carrying amounts of the assets within the CGU are as follows:
Asset 1 P150,000
Asset 2 200,000
Asset 3 50,000
Total P400,000
The estimated fair value less costs of disposal of Asset 2 is P190,000, which is greater than its value in use.
How much is the carrying amount of Asset 1 after impairment loss is recognized?
Question 1
On December 31, 20x7, a manufacturing plant with a carrying amount of P40,000,000 (cost of P50,000,000 less accumulated depreciation of P10,000,000) was tested for impairment. An impairment loss of P12,000,000 was recognized and the basis of the recoverable amount was the estimated fair value less costs to sell of P28,000,000. The plant had a remaining useful life of 10 years. On December 31, 20x9, there are indications that the impairment loss recognized in 20x7 may be reversed. The value in use is estimated at P35,000,000 whilst the fair value less costs to sell is estimated at P30,000,000. What is the amount of impairment reversal should be recognized on December 31, 20x9?
Question 2
On January 1, 2020, the shareholders of Jaybo Company approve a plan that grants the company's five executives options to purchase 3,000 shares each of the company's P50 par value ordinary shares. The options are granted on January 2, 2020 and may be exercised anytime from January 1, 2023 to December 31, 2023. Based on an option pricing model used by Jaybo Company, the fair value of the option on the date of grant was P40. The market price per share on January 1, 2020 was P95, while the option price is P60. Other information follow:
The executive must be in the employ of the company when exercising the options.
1 executive left the company during 2021.
The remaining options vested and all vested options were exercised in 2023.
How much is the compensation expense for the year ended 2021?
Question 3
On December 31, 20x14. Visayas Company showed the following intangible assets. Trademark P6,000,000; Patent P3,000,000. The trademark has 8 years remaining in the legal life. However, it is anticipated that the trademark will be routinely renewed in the future. Thus, the trademark is considered to have an indefinite life. Because of an inflationary economy, the trademark is expected to generate cash flows of P200,000 per year. The appropriate discount rate is 10%. Mathematically, the discounted value of a stream of indefinite annual cash flows is simply computed by dividing the annual cash flow by the discount rate. The patent has a remaining economic life of 5 years. It is expected that the patent will generate cash flows of P500,000 per year. The appropriate discount rate is also 10%. The present value of an ordinary annuity of 1 at 10% for 5 periods is 3.79. What total amount should be recognized as impairment loss in 20x14?
Question 4
ABC has a year end of 31 December 20x4. On 15 December 20x4 the directors publicly announced their decision to close an operating unit and make a number of employees redundant. Some of the employees currently working in the unit will be transferred to other operating units within ABC.
The estimated costs of the closure are as follows:
Redundancy costs P800,000
Lease termination costs 200,000
Relocation of continuing employees to new locations 400,000
Retraining of continuing employees 300,000
Total P1,700,000
What is the closure provision that should be recognized?
Question 5
The shareholders' equity section of DDD Corporation's balance sheet at December 31, 20x7 was as follows: Ordinary share capital (P10 par value authorized 1,000,000 shares issued and outstanding 900,000 shares) P9,000,000; Share premium P2,700,000 Retained earnings P1,300,000.
On January 2, 20x8, DDD purchased and retired 100,000 of its shares for P1,800,000. Immediately after the retirement of these 100,000 shares, how much should be the balance of the shareholders' equity after the retirement?