What amount of cash and cash equivalents should the entity report on December 31, 2020? What amount of impairment loss on the machine should Aye Company recognize in 2021? What amount of gain loss on reclassification to PPE should Aye Company recognize in 2022? Situation 1 The entity reported the following items on December 31, 2020:Bank A - demand depositUndeposited customer checksCurrency and coins on handSavings Deposit – for plant expansionBank B - demand deposit270,000104,00011,6008,000,000400,000Treasury bills – 7 months maturityTreasury bills – 2 months maturityMarketable equity securities600,000300,000500,000The demand deposit in Bank B represents 20% compensating balance for a P2,000,000 loan with the bank.The entity may not withdraw the balance until the loan is repaid in 2024.Situation 2 On January 1, 2020, Aye Company acquired machinery worth P8,000,000 with a 10-year usefullife and no residual value. The entity elected to use the cost model. On December 31, 2021, the entity decidedto sell the asset and classified it as held for sale. The fair value less cost of disposal on such date P5,100,000.On December 31, 2022, the entity decided to classify the asset back into property, plant and equipment sincethere were no buyers for the asset. On this date, the fair value less cost of disposal is P4,700,000 and the valuein use is P5,500,000.

Cash and Cash Equivalents Cash and Cash Equivalents are important segment in the current assets of…

What amount of cash and cash equivalents should the entity report on December 31, 2020? What amount of impairment loss on the machine should Aye Company recognize in 2021? What amount of gain loss on reclassification to PPE should Aye Company recognize in 2022?

What amount of cash and cash equivalents should the entity report on December 31, 2020? What amount of impairment loss on the machine should Aye Company recognize in 2021? What amount of gain loss on reclassification to PPE should Aye Company recognize in 2022?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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