Reference no: EM132704405

Frankenstein Company has a group of machines having an aggregate carrying amount at December 31, 2016 of P1,230,000.

Upon analysis, the following information about the future expected cash inflows and outflows based on the diminishing productivity expected of the machinery as it ages and the increasing cost that will be incurred to generate output from the machines:

Year             Revenues            Costs, excluding
(inflows)     depreciation     (outflows)
2017           750,000                280,000
2018           800,000            420,000
2019            650,000             550,000
2020           200,000              160,000

1. The selling price of the machinery was determined by reference to used machinery quotations from a well-known dealer. After deducting the estimated disposal costs, the net selling price is calculated as P845,000.
2. The pre-tax discount rate and post-tax discount rate reflecting the specific risks of the machinery are 7% and 2% respectively. Use two decimal points.

Question 1: The net recoverable amount of the machinery is ?

Question 2: The amount of impairment loss is ?