On January 1, 2018, Maximoff Company purchases equipment with a list price of P10,000,000. The following were paid in connection with the purchase of equipment:

• Freight and unloading charges- P200,000 

• Import duties- 300,000 

Maximoff depreciates the equipment using the sum-of-the-years digit method with an estimated useful life of 10 years. Salvage value is expected at P200,000 at the end of its estimated useful life. Maximoff account for this asset using the revaluation model. At the end of 2019, an impairment testing showed that the fair value of the asset on this date was P7,000,000 with the cost to dispose of P350,000. While the net cash flows expected from continuing use of the asset is P1,351,215 annually at a 12% discount rate. The impairment indicators in 2019 did not persist in 2020, the recoverable amount of the asset on December 31, 2020, was at P6,200,000, but the company estimates that the remaining life of the asset on this date shall be 4 years only.

Requirement :

 How much is the impairment loss recognized on profit or loss in 2019?

. How much is the balance of revaluation surplus on December 31, 2021, assuming the company opted to use the piecemeal realization

Answer rating: 100% (QA)

Impairment Loss Recognized on Profit or Loss in 2019 The impairment loss recognized on profit or los... View the full answer