Question: Show the correct solution: (B) On Jan. 1, 2020, ABC Corporation purchased an equipment with a cost of P4,400,000. The equipment has a 6-year life

Show the correct solution:

(B) On Jan. 1, 2020, ABC Corporation purchased an equipment with a cost of P4,400,000. The equipment has a 6-year life and a residual value 0f P200,000. It is depreciated using the sum-of-years digits method. On Jan. 1, 2024, ABC determined that the equipment is impaired. Its fair value less cost to dispose is P750,000. Net annual cashows from its use is P400,000 for the remaining useful life. The appropriate discount rate is 7%. Compute for the following: Carrying value of the equipment before impairment Value in use of the equipment Impairment loss on Jan. 1, 2024 Carrying value of the equipment on Dec. 31, 2024 PPS

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