Please refer to the picture below. Show the complete solution. Thank you. Case 1LOVE INC. purchased machinery on January 1, 201A, at the cost of P100,000. It is being depreciated usingthe straight-line method over its projected useful life of 10 years. On December 31, 201A, the asset's fairvalue was P112,500. Accordingly, an entry was made on that date to recognize the revaluation write-up.An impairment was detected on December 31, 201C, and the recoverable amount of the asset wasdetermined to be P68,000. On December 31. 201C, the fair value of the asset was determined to beP73,000.Based on the preceding information, compute the following:1. What is the revaluation surplus balance at December 31, 201C, before recognition of theimpairment loss?2. What is the amount of impairment loss to be reported on Love's income statement for the year201C?

Given that: Original cost = P100,000 Life = 10 years

Based on the preceding information, compute the following: 1. What is the revaluation surplus balance at December 31, 201C, before recognition of the impairment loss? 2. What is the amount of impairment loss to be reported on Love's income statement for the year 201C?

Based on the preceding information, compute the following: 1. What is the revaluation surplus balance at December 31, 201C, before recognition of the impairment loss? 2. What is the amount of impairment loss to be reported on Love's income statement for the year 201C?

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

Chapter11: Depreciation, Depletion, Impairment, And Disposal

Section: Chapter Questions

Problem 8P: Kam Company purchased a machine on January 2, 2019, for 20,000. The machine had an expected life of...

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Question

Please refer to the picture below. Show the complete solution. Thank you.

Case 1
LOVE INC. purchased machinery on January 1, 201A, at the cost of P100,000. It is being depreciated using
the straight-line method over its projected useful life of 10 years. On December 31, 201A, the asset's fair
value was P112,500. Accordingly, an entry was made on that date to recognize the revaluation write-up.
An impairment was detected on December 31, 201C, and the recoverable amount of the asset was
determined to be P68,000. On December 31. 201C, the fair value of the asset was determined to be
P73,000.
Based on the preceding information, compute the following:
1. What is the revaluation surplus balance at December 31, 201C, before recognition of the
impairment loss?
2. What is the amount of impairment loss to be reported on Love's income statement for the year
201C?

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