Problem Solving - Cost Model, Revaluation model, Impairment of asset and Revaluation of asset.

Solve the questions number 1 to 6, assuming that the companys policy is to account for assets under cost model.

And Solve questions number 7 to 13, assuming that the companys policy is to account for asset under revaluation model.

Chapter 5: Audit of Fixed Assets Case 9 - Cost Model, Revaluation model, Impairment of asset and Revaluation of asset On January 2, 2020, Theseus Company purchased machinery from Zethus r *The assessment by the city government is due to poor planning and noncompliance with the govermment's installation process of the machinery in the area. The management estimates that the machinery will be used for a period of ten years with no residual value. At the end of 2020 , the following information is made available: a. The asset can be sold for P1,270,000 with cost to be incurred of P50,000 to disposed the asset. b. The net cash flows expected for the asset with its continuing use is P200,000 per year. c. Discount rate applicable is 12%. At the end of 2021, the management estimates the following information: a. The net realizable value of the asset on this date is P1,000,000 with P40,000 disposal cost. b. The value in use is based on the annual cash flows of P205,000 at 11% discount rate