Cake Company reported an impairment loss of P784,000 in its income statement for the year 2020. This loss was related to a building that was acquired on January 1, 2010 with a cost of P6,000,000 (no residual value). Depreciation on the building is computed on a straight-line basis and annual depreciation on cost is P240,000. As a result of the building's impairment, depreciation for the year 2021 was revised based on the asset's recoverable amount at December 31, 2020. On December 31, 2023, after recording the depreciation for the year, the entity decided to measure its building using revaluation model. At that time, there were evidences of recovery in the building value owing to the flourishing business in Cake Company's location. The building was then appraised at a fair value of P2,800,000. What is the amount of gain on impairment recovery that Cake Company should report in its 2023 income statement and the amount of revaluation surplus reported in equity at December 31, 2023, respectively?

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Cake Company reported an impairment loss of P784,000 in its income statement for the year 2020. This loss was related to a building that was acquired on January 1, 2010 with a cost of P6,000,000 (no residual value). Depreciation on the building is computed on a straight-line basis and annual depreciation on cost is P240,000. As a result of the building's impairment, depreciation for the year 2021 was revised based on the asset's recoverable amount at December 31, 2020. On December 31, 2023, after recording the depreciation for the year, the entity decided to measure its building using revaluation model. At that time, there were evidences of recovery in the building value owing to the flourishing business in Cake Company's location. The building was then appraised at a fair value of P2,800,000. What is the amount of gain on impairment recovery that Cake Company should report in its 2023 income statement and the amount of revaluation surplus reported in equity at December 31, 2023, respectively?
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