10. Happy Company is involved in the generation and distribution of electricity. Management is reviewing all of its assets for impairment as a result of a fall in the market price of electricity. One of Happy Company's power station is 5 years old and has a carrying amount of P5,000,000 and value in use of P4,400,000, considering the revised electricity price. A similar asset was recently sold to a German-based global power utility for P5,200,000. The estimated incremental costs that would be directly attributable to the disposal are P100,000. The rate used in the computation of the value in use was 15%. The amount of impairment loss to be recognized by Happy Company is a. 100,000 b. 433,700 c. 523,789 d. 0
10. Happy Company is involved in the generation and distribution of electricity. Management is reviewing all of its assets for impairment as a result of a fall in the market price of electricity. One of Happy Company's power station is 5 years old and has a carrying amount of P5,000,000 and value in use of P4,400,000, considering the revised electricity price. A similar asset was recently sold to a German-based global power utility for P5,200,000. The estimated incremental costs that would be directly attributable to the disposal are P100,000. The rate used in the computation of the value in use was 15%. The amount of impairment loss to be recognized by Happy Company is a. 100,000 b. 433,700 c. 523,789 d. 0
Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Chapter12: Auditing Long-lived Assets And Merger And Acquisition Activity
Section: Chapter Questions
Problem 28RQSC
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