(Q5)JJJ Company purchased an equipment for P5,000,000 on January 1, 2019. The equipment had a useful life of 5 years with no residual value. On December 31, 2019, the entity classified the equipment as held for sale. On such date, the fair value less cost of disposal of the equipment was P3,500,000.On December 31, 2020, the entity believed that the criteria for classification as held for sale can no longer be met. On December 31, 2020, the fair value less cost of disposal of the equipment was P2,700,000.

1)Refer to JJJ Company, what is the carrying amount of the equipment on December 31, 2019 before classification as held for sale?

A)4,500,000

B)4,000,000

C)3,500,000

D)5,000,000

2)Refer to JJJ Company, what amount of impairment loss should be recognized in 2019?

A)1,000,000

B)500,000

C)0

D)1,500,000

3)Refer to JJJ Company, what amount should be included in profit or loss in 2020 as a result of the reclassification of the equipment to property, plant and equipment?

A)800,000 gain

B)800,000 loss

C)300,000 gain

D)300,000 loss

4)What is the adjusted carrying amount of the equipment on December 31, 2021?

A)1,800,000

B)2,700,000

C)3,000,000

D)2,000,000

(Q6)Booker Company committed to sell the comic book division, a component of the business, on September 1, 2019. The carrying amount of the division was P4,000,000 and the fair value was P4,500,000. The disposal date is expected on June 1, 2020. The division reported an operating loss of P200,000 for the year ended December 31, 2019.

1)Refer to Booker Company, what amount should be reported as pretax loss from discontinued operation in 2019?

A)500,000

B)200,000

C)700,000

D)0

(Q7)On September 30, 2019, when the carrying amount of the net assets of a business segment was P60,000,000, Young Company signed a legally binding contract to sell the business segment. The sale is expected to be completed by January 31, 2020 at a sale price of P70,000,000.In addition, prior to January 31, 2020, the sale contract obliged Young Company to terminate the employment of certain employees of the business segment incurring an expected termination cost of P2,000,000 to be paid on June 30, 2020.The segment revenue and expenses for 2019 were P40,000,000 and P45,000,000, respectively.

1)Refer to Young Company, what amount should be reported as pretax loss from discontinued operation for 2019?

A)17,000,000

B)15,000,000

C)7,000,000

D)12,000,000

(Q8)At the beginning of current year, Standard Company purchased a mining facility that will have to be restored to certain specifications when the mining production ceases. It is estimated that the mine will continue in operation for 10 years. The cost of the mining facility is P7,000,000 and the restoration cost is expected to be P2,000,000.The appropriate discount rate is 8%. The present value of 1 at 8% for 10 periods is 0.46.

1)Refer to Standard Company, what is the total cost of the mining facility?

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2)Refer to Standard Company, what is the depreciation for current year?

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3)Refer to Standard Company, what is the decommissioning liability on January 1?

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4)Refer to Standard Company, what is the interest expense for current year?

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