MAKINA Company acquired a machine for P6,400,000 on August 31, 2002. The machine has a 5-year life, a P1,000,000 salvage value, and was depreciated using the straight line method. On May 31, 2005, a test for recoverability reveals that the expected net future undiscounted cash inflows related to the continued use and eventual disposal of the machine total P3,000,000. The machine's fair value on May 31, 2005 is P2,700,000 with no residual value. Assuming a loss on impairment is recognized on May 31, 2005, what is MAKINA's depreciation for June 2005? 100,000 111,110 127,040 45,000

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Chapter1: Financial Statements And Business Decisions
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MAKINA Company acquired a machine for P6,400,000 on August 31, 2002. The machine has a 5-year life, a
P1,000,000 salvage value, and was depreciated using the straight line method. On May 31, 2005, a test for
recoverability reveals that the expected net future undiscounted cash inflows related to the continued use
and eventual disposal of the machine total P3,000,000. The machine's fair value on May 31, 2005 is
P2,700,000 with no residual value. Assuming a loss on impairment is recognized on May 31, 2005, what is
MAKINA's depreciation for June 2005?
O 100,000
111,110
127,040
45,000
Transcribed Image Text:MAKINA Company acquired a machine for P6,400,000 on August 31, 2002. The machine has a 5-year life, a P1,000,000 salvage value, and was depreciated using the straight line method. On May 31, 2005, a test for recoverability reveals that the expected net future undiscounted cash inflows related to the continued use and eventual disposal of the machine total P3,000,000. The machine's fair value on May 31, 2005 is P2,700,000 with no residual value. Assuming a loss on impairment is recognized on May 31, 2005, what is MAKINA's depreciation for June 2005? O 100,000 111,110 127,040 45,000
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