5. Three years ago, (January 1, 2018), ABC purchased land with a cost of P5,000,000. ABC subsequently measures the land at revalued amount although, from the year of acquisition, the fair value wasn’t significantly different until December 31, 2023, when roads were cemented and a hospital was built nearby. Its fair value has moved up to P8,500,000. Unexpectedly, the company needs money the following year and decides to move to another business location. Eventually, the property was sold for P10,000,000 incurring a cost of P700,000 to sell it. As a result of this transaction, how much is the total impact on its equity? (indicate the word increase or decrease after the amount such as this 100,000 increase)
5. Three years ago, (January 1, 2018), ABC purchased land with a cost of P5,000,000. ABC subsequently measures the land at revalued amount although, from the year of acquisition, the fair value wasn’t significantly different until December 31, 2023, when roads were cemented and a hospital was built nearby. Its fair value has moved up to P8,500,000. Unexpectedly, the company needs money the following year and decides to move to another business location. Eventually, the property was sold for P10,000,000 incurring a cost of P700,000 to sell it. As a result of this transaction, how much is the total impact on its equity? (indicate the word increase or decrease after the amount such as this 100,000 increase)
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
Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments
Section: Chapter Questions
Problem 10MC
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5. Three years ago, (January 1, 2018), ABC purchased land with a cost of P5,000,000. ABC subsequently measures the land at revalued amount although, from the year of acquisition, the fair value wasn’t significantly different until December 31, 2023, when roads were cemented and a hospital was built nearby. Its fair value has moved up to P8,500,000. Unexpectedly, the company needs money the following year and decides to move to another business location. Eventually, the property was sold for P10,000,000 incurring a cost of P700,000 to sell it. As a result of this transaction, how much is the total impact on its equity? (indicate the word increase or decrease after the amount such as this 100,000 increase)
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