Ayala Corporation purchased equipment for P5,000,000 on January 1, 2020 with a useful life of 10 years and no residual value. On December 31, 2021, the entity classified the asset as held for sale. The fair value of the equipment on December 31, 2021 is P3,300,000 and the cost of disposal is P100,000. On December 31, 2022, the fair value of the equipment is P3,800,000 and the cost of disposal is P200,000. On December 31, 2022, the entity believed that the criteria for classification as held for sale can no longer be met. Accordingly, the entity decided not to sell the asset but to continue to use it. 8. What is the impairment loss to be recognized on December 31, 2021? a. 1,300,000 b. 800,000 c. 700,000 d. 0
Ayala Corporation purchased equipment for P5,000,000 on January 1, 2020 with a useful life of 10 years and no residual value.
On December 31, 2021, the entity classified the asset as held for sale. The fair value of the equipment on December 31, 2021 is P3,300,000 and the cost of disposal is P100,000.
On December 31, 2022, the fair value of the equipment is P3,800,000 and the cost of disposal is P200,000.
On December 31, 2022, the entity believed that the criteria for classification as held for sale can no longer be met. Accordingly, the entity decided not to sell the asset but to continue to use it.
8. What is the impairment loss to be recognized on December 31, 2021?
a. 1,300,000
b. 800,000
c. 700,000
d. 0
9. What is the measurement of the equipment that ceases as held for sale on December 31, 2022?
10. What amount should be recognized in profit or loss because of the reclassification in 2022?
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