What is the depreciation expense of the equipment for 2023? what is the recoverable amount of the equipment on december 31, 2022 how much is the impairment loss to be reported for 2022? what is the carrying value of the equipment on dec 31 2022 prior to impairment testing? show solution
What is the depreciation expense of the equipment for 2023? what is the recoverable amount of the equipment on december 31, 2022 how much is the impairment loss to be reported for 2022? what is the carrying value of the equipment on dec 31 2022 prior to impairment testing? show solution
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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Question
What is the
what is the recoverable amount of the equipment on december 31, 2022
how much is the impairment loss to be reported for 2022?
what is the carrying value of the equipment on dec 31 2022 prior to impairment testing?
show solution
Transcribed Image Text:Read each problem carefully and choose the CORRECT answer among the choices.
PROBLEM:
On January 1, 2020, Chambers Company purchased an equipment for P2,500,000. The equipment was
estimated to have a useful life of 8 years from date of acquisition and a residual value of P250,000. It is
the company's policy to depreciate all of its property, plant and equipment using the straight-line method.
On December 31, 2022, the company tested the equipment for possible impairment. The company
determined the following information on December 31, 2022:
P300,000 per year
Undiscounted net cash inflows
Fair value of the equipment
Estimated cost of disposal
Discount rate
P1,400,000
P100,000
8%
There have been no changes in the initial estimates of the useful life and residual value.
The PV factors are as follows:
PV factor of 1 at 8% for 5 periods
0.6806
PV factor of 1 at 8% for 8 periods
0.5403
PV factor of ordinary annuity of 1 at 8% for 5 periods
3.9927
PV factor of ordinary annuity of 1 at 8% for 8 periods
5.7466
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