Group Activity No. 2-Noncurrent Asset Held For Sale-2

Group Activity No.
2020-11-02
Group Name: Team 3 Date: November 11, 2020

Leader: Jamolin, Erika
Members: Enaldo, Carol
Felisilda,Elpie
Gicale, Rica
Guillena, Emerie
Hidalgo, Cleah
Iting, Johnson
Janoplo, Daisy
Villalon, Jericho
I. Short Problems. Write your answer on the space provided. Show your solution.
1. A Co. accounts for noncurrent assets using the cost model. On October 1, 2020, the entity
classified a noncurrent asset as held for sale. At that date, the asset’s carrying amount was
P3,200,000, its fair value was estimated at P2,200,000 and the cost of disposal at P200,000. On
December 15, 2020, the asset was sold for net proceeds of P1,850,000. What amount should be
included as an impairment loss in the statement of comprehensive income for the year ended
December 31, 2020?? P1,200,000
Solution:
Carrying amount 3,200,000
Fair value less cost to sell (2,000,000) - (2,200,000-200,000)
Impairment loss 1,200,000
Sales price 1,850,000

Carrying amount–December 15, 2020 (2,000,000)
Loss on disposal (150,000)
2. B Co. accounts for noncurrent assets using the cost model. On October 30, 2020, the entity
classified a noncurrent asset as held for sale. At that date, the asset’s carrying amount was
P1,500,000, its fair value was estimated at P1,100,000 and the cost of disposal at P150,000. On
November 20, 2020, the asset was sold for net proceeds of P800,000. What amount should be
included as loss on disposal in the statement of comprehensive income for the year ended
December 31, 2020? ? P150,000
Solution:
Fair value less cost to sell (950,000) (1,100,000-150,000)
Impairment loss 550,000
Sales price 800,000

Carrying amount on November 20, 2020, date of sale (950,000)
Loss on disposal (150,000 )
3. C Co. is planning to dispose of a collection of assets. The entity designated these assets as a
disposal group. The carrying amount of these assets immediately before classification as held for
sale was P2,000,000. Upon being classified as held for sale, the assets were revalued to
P1,800,000. The entity feels that it would cost P100,000 to sell the disposal group. What is the
carrying amount of the disposal group after classification as held for sale? P1,700,000
Solution:
Fair value 1,800,000
Cost to sell 100,000
Fair value less cost to sell–lower 1,700,000
4. On January 1, 2020, D Co. classified as held for sale a noncurrent asset with a carrying amount of
P5,000,000. On this date, the asset is expected to be sold for P4,600,000. Reasonable disposal
cost to be incurred on sale is expected at P200,000. By December 31, 2020, the asset had not been
sold and management after considering its options decided to place back the noncurrent asset into
operations. On that date, the entity estimated that the noncurrent asset is expected to be sold at
P4,300,000 with disposal cost of P50,000. The carrying amount of the noncurrent asset is
P4,000,000 on December 31, 2020 if the noncurrent asset is not classified as held for sale. What
is the carrying amount of the asset that should be reported in the statement of financial position
on December 31, 2020? P4,250,000
Solution:
Carrying amount-December 31, 2020= 4,000,000
Fair value less cost to sell- December 31, 2020= 4,300,000

(50,000)
4,250,000
5. E Co. purchased equipment for P5,000,000 on Janaury 1, 2020 with a useful life of 10 years and
no residual value. On January 1, 2022, the entity classified the asset as held for sale. The fair
value of the equipment on January 1, 2022 is P3,000,000 and the cost of disposal is P100,000. On
December 31, 2022, the fair value of the equipment is P3,800,000 and the cost of disposal is
P200,000. On December 31, 2022, the entity believed that the criteria for classification as held for
sale can no longer met. Accordingly, the entity decided not to sell the asset but to continue to use
it.
a. What is the measurement of the equipment that ceases as held for sale on December 31,
2022? P3,500,000 .
b. What amount should be recognized in profit or loss as a result of reclassification in 2022?

P600,000
Solution:
Depreciation-2020 (5,000,000/10) 500,000
Depreciation-2021 500,000
Accumulated Depreciation 1,000,000
Equipment 5,000,000
Accumulated depreciation 1,000,000
Equipment held for sale 4,000,000

Fair value less cost of disposal (3,000,000-100,000) 2,900,000
Impairment loss 1,100,000
Carrying amount – January 1, 2022 4,000,000

Depreciation that would have been recognized in 2022 (500,000)
Carrying amount – December 31, 2022 3500,000
Recoverable amount (3800,000-200,000) 3,600,000
Measurement of equipment – lower 3,500,000

Carrying amount per book – January 1, 2022 2,900,000
Gain on reclassification 600,000
Lvts20

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Group Activity No.

Group Name: Team 3 Date: November 11, 2020

Sales price 1,850,000

Sales price 800,000

Fair value less cost to sell- December 31, 2020= 4,300,000

b. What amount should be recognized in profit or loss as a result of reclassification in 2022?

Carrying amount 4,000,000

Carrying amount – January 1, 2022 4,000,000

Recoverable amount (3800,000-200,000) 3,600,000

Measurement of equipment – lower 3,500,000

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