Problems: Basic Problems

1. On January 1, 2019, Laity Company purchased a patent with a cost of P5,200,000 and a useful life of ten years. On December 31, 2019, the entity determined that impairment indicators were present'. The fair value less cost of disposal of the patent was estimated to be P3,600,000. The, value in use is estimated to be P3,800,000. What amount should be reported as impairment loss for 201 9?

A. 0B. 360,000C. 560,000 D. 880,000

2. At the beginning of current year, Uptown Company acquired an intangible asset for P3,000,000. The intangible asset has an estimated useful life of 10 years. At the current year-end, the intangible asset was evaluated to determine whether it was impaired. On same date, the fair value less cost of disposal of the intangible asset is P2,000,000. The asset is expected to generate future cash flows of P300,000 annually for the remaining 9 years. The appropriate discount rate is 5%. The present value of an ordinary annuity of 1 at 5% for nine periods is 7.11. What is the impairment loss to be recognized for the current year?

A. 0B. 567,000C. 700,000 D. 867,000