On January 3, 2018, Brave company acquired an item of property, plant and equipment at a cost of P1,000,000. The asset's estimated residual value is P100,000 and estimated useful life of 10 years. The company uses straight-line of depreciation computed to the nearest month. On October 1, 2021, the asset was reclassified as "held for sale". Its fair value on this date was P500,000 and the cost to sell was estimated at P20,000. In January 2022, the asset was sold for P500,000 incurring disposal costs of P10,000 on the sale. How much impairment loss from reclassifying the asset as held for sale is reported for year 2021?

On January 3, 2018, Brave company acquired an item of property, plant and equipment at a cost of P1,000,000. The asset's estimated residual value is P100,000 and estimated useful life of 10 years. The company uses straight-line of depreciation computed to the nearest month. On October 1, 2021, the asset was reclassified as "held for sale". Its fair value on this date was P500,000 and the cost to sell was estimated at P20,000. In January 2022, the asset was sold for P500,000 incurring disposal costs of P10,000 on the sale. How much impairment loss from reclassifying the asset as held for sale is reported for year 2021?

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

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 11E: On January 1, 2014, Klinefelter Company purchased a building for 520,000. The building had an...

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Concept explainers

Market Efficiency

Market efficiency refers to the market's ability to provide investors with all available information about investment options for buying and selling securities. Market efficiency reflects the true value of securities without undervaluing or overvaluing them. When the quality and quantity of information increase, the market becomes more efficient, allowing it to reduce arbitrage and obtain higher market returns from investment. In a well-functioning market, everyone receives all information completely and immediately at no cost. It opens up a plethora of opportunities for investors to access various investment options.

Question

100%

On January 3, 2018, Brave company acquired an item of property, plant and equipment at a cost
of P1,000,000. The asset's estimated residual value is P100,000 and estimated useful life of 10
years. The company uses straight-line of depreciation computed to the nearest month. On
October 1, 2021, the asset was reclassified as "held for sale". Its fair value on this date was
P500,000 and the cost to sell was estimated at P20,000. In January 2022, the asset was sold for
P500,000 incurring disposal costs of P10,000 on the sale.
How much impairment loss from reclassifying the asset as held for sale is reported for year
2021?

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