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Module 1.4 Discussion Problems

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0% found this document useful (0 votes)
754 views6 pages

Module 1.4 Discussion Problems

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heyhey
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Use the following information for the next four questions: On December 31, 20x1, an entity classifies machinery with historical cost of 3,000,000, accumulated depreciation of P2,000,000 and remaining useful life of 5 years as held for sale. The entity depreciates its machinery using the straight line method with no residual value. The fair value of the machinery on December 31, 20x1 is ?800,000 while costs to sell are estimated at P50,000. The sale price of the machinery is 800,000. 11. Which of the following shall be recognized by the entity in its 20x1 financial statements? Scanned with CamScanner Held for sale asset a, P800,000 s Impairment loss b. P750,000 P150,000 c. P750,000 P200,000 d. PO * —. P250,000 P250,000 12. 13. & Bee 20x2, the machinery remains unsold, The air of the machinery on December 31, 20x2 is P700,000 while costs to sell’ are estimat ) f fed at . decreased the sale price to P650 at P50,000. The entity : 000. Which of the followin shall be recognized by the entity in its 20x2 fendi statements? Held for sale asset Impairment loss a. P700,000 * P100,000 b. 650,000 P100,000 c. P650,000 " P150,000 d. PO : P100,000 14. Requirement; Provide the journal entry on December 31, 20x2. 15. On December 31, 20x3, the machinery remains unsold. The fair value of the machinery on December 31, 20x3 is P1,100,000 while costs to sell are estimated at P50,000. The failure to locate a buyer and complete the sale is beyond the entity’s control. The entity further decreased the sale price to P600,000. Which of the following shall.be recognized by the entity in its 20x3 financial statements? f . Held for sale asset Gain on impairment recovery a. 1,100,000 450,000 b. P1,000,000 P350,000 c. 750,000 oe he 350,000 Scanned with CamScanner 16. 17. 18. 19. _ rate of 30%. Assume there are no temporary differences. Requirement: Provide the journal entry on December 31, 2043 On December 31, 20x4, the. machinery remains unsold, Te fair value of the machinery on December 31, 20x4 is P1 000, while costs to sell are estimated at P50,000. The entity did », further decrease the sale price. Which of the following shal recognized by the entity in its 20x4 financial statements? a. Property, plant and equipment for P400,000 b. Property, plant and equipment for P1,000,000. c. Noncurrent asset held for sale for P950,000. d. Noncurrent asset held for sale for P1,000,000. Requirement: Provide the journal entry on December 31, 20,4, On April 1, 20x1, an entity decides to dispose a major produg line. All the conditions for held for sale classification unde PERS 5 are met. On this date, the carrying amount of the ne assets of the major product line is P1,000,000. The entity expects gross proceeds of P600,000 from the disposal. Direc costs associated to the decision to dispose the major produ line amount to P50,000. From January 1 to March 31, the profit from the product lineis P200,000, while from April 1 to December 31, the loss from the product line is P120,000. The entity is subject to an income tax In relation to the product line, how much profit (loss) will the entity recognize in its 20x1 financial statements? Discontinued operations Continuing operations a. 200,000 399,000 d b.. 140,000 399,000 c. (250,000) (84,000) d. 0 (259,000) Scanned with CamScanner 5. The statements of financial position and profit or loss of an entity on December 31, 20x1 shows the following information: Cash and cash equivalents 1,800,000 Trade and other receivables 3,600,000 | Inventories 10,800,000 | Investment property (Cost model) 4,200,000 — Investment in associate 2,400,000 Property, plant and equipment 15,000,000 Total assets 37,800,000 Trade and other payables “14,700,000 Scanned with CamScanner current fax payable ferred tax liability inary share capital petained earnings - Dec. 31, 20x1 ther components of equity otal liabilities & equity Revenue Cost of sales Gross profi 4 pistribution costs Administrative expenses Finance costs Share of profit of associates Profit for the year 5,400,000 2,100,000 6,000,000 8,100,000 ___ 1,500,000 6,720,000 — 2,400,000) _ 4,320,000 (936,000) (1,080,000) (360,000) 288,000 2,232,000 On December 31, 20x1, the entity commits to a plan to sell a component of an entity that represents a major geographical area of operations. All the conditions of PFRS 5 are met. Information on the component is as follows: Financial position: Accounts receivable Inventory Equipment Accounts payable Financial performance: Revenue Cost of sales Distribution costs Administrative expenses Additional information: * The entity determines costs to sell of P1,600, that the equip’ 000. The carrying amounts 0 240,000 672,000 3,360,000 432,000 2,000,000 1,200,000 280,000 432,000 ment has a fair value less f the other Scanned with CamScanner assets and the liability approximate their fair value less costs to sell. Requirement:.Prepare the December 31, 20x1 classified statement of financial position and the statement of profit or loss of the entity. Ignore the effects of income taxes. Scanned with CamScanner

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