At year-end, Zee Company has an equipment with the following cost and accumulated

depreciation:
Equipment 9,000,000
Accumulated Depreciation 3,000,000

Due to obsolescence and physical damage, the equipment is found to be impaired.

At yearend, the entity has determined the following information related to the equipment:
Fair Value less costs of disposal 4,500,000
Value in use 4,000,000

What amount should be reported as impairment loss for the year?

1,500,000
2,000,000
500,000
0

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co
Jacqueline Company had an equipment with carrying amount of P4,500,000 at yearend:

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Expected discounted net cash flows 4,000,000
Fair Value of similar asset 4,150,000

o.
rs e
Fair value of the asset when sold stand-alone 4,280,000
ou urc
What is the impairment loss for the current year?
500,000
o

350,000
aC s

220,000
vi y re

Ball Company determined as a result of a plant rearrangement that there had been a significant
change in the manner in which a machinery was going to be used in the manufacturing process.
ed d

Expected future cash inflows from use of the machinery 3,500,000

ar stu

Expected future cash outflows from use of the machinery 750,000

Expected future cash proceeds from sale of machinery
at the disposal date 500,000
is
Th

For purposes of determining impairment, what is the amount of expected future cash flows that
would be used for the machinery?
4,000,000
3,250,000
sh

3,500,000
2,750,000

Bubba Company determined that there had been a significant decrease in the market value of an
equipment used in the manufacturing process.

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 At yearend, the entity compiled the following information:
Original cost of equipment 5,000,000
Accumulated Depreciation 3,000,000
Expected undiscounted net future cash flows related to the continued use
and eventual disposal of the equipment 1,750,000
Fair value of equipment 1,250,000

What amount of impairment loss should be reported in the income statement for the year?
3,250,000
3,750,000
750,000
250,000

Zambia Company purchased four convenience store buildings on January 1, 2010 for a total of
P25,000,000. The building have been depreciated using the straight line method with a 20 year

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useful life and 10% residual value.

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On January 1, 2016, the entity has converted the building into hotel and restaurant. Because of

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the change in the use of the buildings, the entity is evaluating the buildings for possible
impairment.

o.
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The entity estimated that the buildings have a remaining useful life of 10 years, that their residual
ou urc
value will be zero, that undiscounted net cash inflows from the buildings will total P1,500,000
per year and that the current fair value of the four buildings totals P10,000,000.
The appropriate discount rate is 12%. The present value of ordinary annuity of 1 at 12% for 10
o

periods is 5.65.
aC s

What amount of impairment loss should be recognized for 2016?

vi y re

8,250,000
9,775,000
7,500,000
0
ed d
ar stu

What is the depreciation of the buildings for 2016?

1,000,000
900,000
is

847,500
Th

762,750

Marjorie Company acquired a machine for P3,200,000 on August 31, 2013. The machine had a
5-year life, P500,000 residual value, and was depreciated using the straight line method.
sh

On May 31, 2016, a test for recoverability revealed that the expected net future undiscounted
cash inflows related to the continued use and eventual disposal of the machine amounted to
P1,080,000. The fair value on the same date is P1,350,000 with no residual value.
What is the impairment loss that should be recognized on May 31, 2016?
635,500

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 365,000
500,000
0

What is the depreciation for June 2016?

63,520
50,000
45,000
31,480

On January 1, 2016, Elite Company purchased equipment with cost of P11,000,000, useful life of
10 years and no residual value. The entity used straight line depreciation.
On December 31, 2016 and December 31, 2017, the entity determined that the impairment
indicators are present. There is no change in the useful life or residual value.

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December 31, 2016 December 31, 2017

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FVLCD 8,100,000 8,400,000

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VIU 8,550,000 8,200,000

o.
rs e
What is the impairment loss for 2016?
ou urc
1,800,000
1,350,000
2,450,000
o

0
aC s
vi y re

What is the gain on reversal of impairment for 2017?

400,000
250,000
800,000
ed d

0
ar stu

What is the depreciation for 2018?

1,100,000
is

1,050,000
Th

1,025,000
950,000
sh

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