Question
Frankenstein Company has a group of machines having an aggregate carrying amount at December 31, 2016 of P1,230,000. Upon analysis, the following information about the
Frankenstein Company has a group of machines having an aggregate carrying amount at December 31, 2016 of P1,230,000.
Upon analysis, the following information about the future expected cash inflows and outflows based on the diminishing productivity expected of the machinery as it ages and the increasing cost that will be incurred to generate output from the machines:
YearRevenuesCosts, excluding
(inflows)depreciation (outflows)
2017750,000280,000
2018800,000420,000
2019650,000550,000
2020200,000160,000
The selling price of the machinery was determined by reference to used machinery quotations from a well-known dealer. After deducting the estimated disposal costs, the net selling price is calculated as P845,000.
The pre-taxdiscount rate and post-tax discount rate reflecting the specific risks of the machinery are 7% and 2% respectively. Use two decimal points.
- The net recoverable amount of the machinery is?
- The amount of impairment loss is?
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