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On January 1, 2021, Lynne Company has equipment having a useful life of 10 years with the following cost and accumulated depreciation. The company uses straight-line method in depreciating its equipment. Equipment-P5,000,000 Accumulated depreciation-P1,500,000 On December 31, 2021, after recording depreciation expense for the year, the equipment was subjected to an assessment and it was found to be impaired due to obsolescence and physical damage. Lynne Company has determined the following: Undiscounted cash flows of the equipment-P3,100,000 Fair value of the equipment less cost to sell-P2,250,000 Discounted cash flows of the equipment-P2,500,000 Lynne Company recognizes an impairment loss on December 31, 2021 at a. 1,000,000 b. 750,000 c. 500,000

On January 1, 2021, Lynne Company has equipment having a useful life of 10 years with the following cost and accumulated depreciation. The company uses straight-line method in depreciating its equipment. Equipment-P5,000,000 Accumulated depreciation-P1,500,000 On December 31, 2021, after recording depreciation expense for the year, the equipment was subjected to an assessment and it was found to be impaired due to obsolescence and physical damage. Lynne Company has determined the following: Undiscounted cash flows of the equipment-P3,100,000 Fair value of the equipment less cost to sell-P2,250,000 Discounted cash flows of the equipment-P2,500,000 Lynne Company recognizes an impairment loss on December 31, 2021 at a. 1,000,000 b. 750,000 c. 500,000

Intermediate Accounting: Reporting And Analysis
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
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 11E: On January 1, 2014, Klinefelter Company purchased a building for 520,000. The building had an...
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On January 1, 2021, Lynne Company has equipment having a useful life of 10 years with the following cost and accumulated depreciation. The company uses straight-line method in depreciating its equipment.

Equipment-P5,000,000
Accumulated depreciation-P1,500,000

On December 31, 2021, after recording depreciation expense for the year, the equipment was subjected to an assessment and it was found to be impaired due to obsolescence and physical damage. Lynne Company has determined the following:

Undiscounted cash flows of the equipment-P3,100,000
Fair value of the equipment less cost to sell-P2,250,000
Discounted cash flows of the equipment-P2,500,000

Lynne Company recognizes an impairment loss on December 31, 2021 at
 
a. 1,000,000
b. 750,000
c. 500,000
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