Question
Service Company markets products to real estate agents and to new homeowners, purchased a customer list for P600,000 on January 2, 2020. Because of turnover
Service Company markets products to real estate agents and to new homeowners, purchased a customer list for P600,000 on January 2, 2020. Because of turnover among real-estate agents and because new homeowners gradually become established homeowners, the list is expected to have economic value for only four years. The company uses the straightline method of amortization. In January 2021, the customer list was tested for impairment as a result of substantial turndown in the retail-estate market in the area. It is estimated that the customer list will generate future cash flows of P100,000 per year for the next three years and that the fair value (less cost to sell) of the customer list is P240,000. The market rate of interest on this date is 8%.What amount of impairment loss on customer lists should Service Company recognize?*
2 points
a.None
b.450,000
c.210,000
d 192,300
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