Reference no: EM132961110
On January 2, 2020, Quezon Inc. purchased equipment with a cost of P10,500,000, a useful life of 12 years and no salvage value. The Company uses sum-of-the-years-digit method of depreciation. At December 31, 2020 and December 31, 2021, the company determines that impairment indicators are present.
The following information is available for impairment testing at each year end:
12/31/2020 12/31/2021
Fair value less cost to sell P8,515,000 P7,530,000
Value-in-use P8,551,000 P7,315,000
Problem 1: There is no change in the asset's useful life or salvage value. The 2021 income statement will report
a. Recovery of Impairment Loss of P278,013
b. Impairment Loss of P120,067. .
c. Recovery of Impairment Loss of P138,000
d. Recovery of Impairment Loss of P184,910
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