Presented below is information related to equipment owned by King Cobra Company: Cost 9,000,000 Accumulated depreciation 1,500,000 Fair value less cost to sell 3,200,000 King Cobra Company will continue to use the asset for its remaining 5 year life, at the end of which it is expected to be sold at P500,000. Expected cash inflows from the use of the asset is P1,500,000, after incurring production costs including annual maintenance of P700,000. The appropriate discount rate is 10%. The present value: Single payment of 1 at 10% for 5 periods 0.6209 Ordinary annuity of 1 at 10% for 5 periods 3.7908 How much is the impairment loss? A . 4,156,910 B. 3,343,090 C. 568,618 D. 3,032,640
Presented below is information related to equipment owned by King Cobra Company: Cost 9,000,000 Accumulated depreciation 1,500,000 Fair value less cost to sell 3,200,000 King Cobra Company will continue to use the asset for its remaining 5 year life, at the end of which it is expected to be sold at P500,000. Expected cash inflows from the use of the asset is P1,500,000, after incurring production costs including annual maintenance of P700,000. The appropriate discount rate is 10%. The present value: Single payment of 1 at 10% for 5 periods 0.6209 Ordinary annuity of 1 at 10% for 5 periods 3.7908 How much is the impairment loss? A . 4,156,910 B. 3,343,090 C. 568,618 D. 3,032,640
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 13P
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Question
Presented below is information related to equipment owned by King Cobra Company:
Cost 9,000,000
Fair value less cost to sell 3,200,000
King Cobra Company will continue to use the asset for its remaining 5 year life, at the end of which it is
expected to be sold at P500,000. Expected
incurring production costs including annual maintenance of P700,000. The appropriate discount rate is
10%. The present value:
Single payment of 1 at 10% for 5 periods 0.6209
Ordinary annuity of 1 at 10% for 5 periods 3.7908
How much is the impairment loss?
A
.
4,156,910 B. 3,343,090 C. 568,618 D. 3,032,640
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