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Impairment and Reversal; Cost Model Problem On January 1, 2021, Sera Company acquired an equipment...

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Accounting

Impairment and Reversal; Cost Model Problem On January 1, 2021, Sera Company acquired an equipment at a cost of P10,000,000. It was estimated to have a useful life of 10 years and no residual value. The straight-line method is used in recording depreciation. On December 31, 2022, the company reported this asset at P6,000,000 which is the fair value on such date. On December 31, 2023, the company determined that the fair value of the impaired asset had increased to P7,500,000. 1. What is the carrying amount of the impaired asset on December 31, 2023? 2. What is the carrying value of the asset on December 31, 2023, on the basis that it was not impaired? 3. What amount of gain on reversal of impairment should be reported in the 2023 income statement? 4. Prepare the journal entry to recognize the reversal of impairment on December 31, 2023.

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