The R Company acquired an equipment on January 1, 2016 at a cost of P900,000, depreciating it over 8 years with a nil residual value. On January 1, 2019 the M Company acquired 100% of R and estimated the fair value of the equipment at P520,000, with a remaining life of 5 years. This fair value was not incorporated into R’s books and the depreciation expense continued to be calculated by reference to original cost. What adjustments should be made to the carrying amount of equipment in preparing the consolidated statements of financial position for the year ended December 31, 2020? Increase or decrease? *
The R Company acquired an equipment on January 1, 2016 at a cost of P900,000, depreciating it over 8 years with a nil residual value. On January 1, 2019 the M Company acquired 100% of R and estimated the fair value of the equipment at P520,000, with a remaining life of 5 years. This fair value was not incorporated into R’s books and the depreciation expense continued to be calculated by reference to original cost. What adjustments should be made to the carrying amount of equipment in preparing the consolidated statements of financial position for the year ended December 31, 2020? Increase or decrease? *
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 7RE: Bliss Company owns an asset with an estimated life of 15 years and an estimated residual value of...
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Question
The R Company acquired an equipment on January 1, 2016 at a cost of P900,000,
a. P42,500 increase
b. P17,000 decrease
c. P25,500 decrease
d. P42,500 decrease
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