Accumulated depreciation 600,000 Fair value less costs of disposal (FVLCD) 900,000 Value in use (VIU) 1,080,000 After the impairment, the building is assessed to have a remaining useful life of six years and no residual value. On December 31, 20x2, Entity A determines an indication that the impairment loss recognized in the prior period may no longer exist. The revised recoverable amount of the building on December 31, 20x2 is ₱1,280,000. If no impairment loss had been recognized in the prior period, the carrying amount of the building on December 31, 20x2 would have been ₱1,200,000. How much is the gain on reversal of impairment on December 31, 20x2? a. 314,351 b. 312,156 c. 303,315 d. 300,000
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
On December 31, 20x1, Entity A determines that its building is impaired. Entity A gathers the following information: Building 2,000,000 Accumulated depreciation 600,000 Fair value less costs of disposal (FVLCD) 900,000 Value in use (VIU) 1,080,000 After the impairment, the building is assessed to have a remaining useful life of six years and no residual value. On December 31, 20x2, Entity A determines an indication that the impairment loss recognized in the prior period may no longer exist. The revised recoverable amount of the building on December 31, 20x2 is ₱1,280,000. If no impairment loss had been recognized in the prior period, the carrying amount of the building on December 31, 20x2 would have been ₱1,200,000. How much is the gain on reversal of impairment on December 31, 20x2?
a. 314,351
b. 312,156
c. 303,315
d. 300,000
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