On January 1, 20x1, Wheel Co. purchased a machine for P2,000,000 and established an annual straight-line depreciation rate of 10% with no residual value. During 20x5 Wheel determined that the machine will not be economically useful in its production process after December 31, 20x5. Wheel estimated that the machine had no residual value at December

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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On January 1, 20x1, Wheel Co. purchased a machine for
P2,000,000 and established an annual straight-line depreciation
rate of 10% with no residual value. During 20x5 Wheel
determined that the machine will not be economically useful
in its production process after December 31, 20x5. Wheel
estimated that the machine had no residual value at December
Transcribed Image Text:On January 1, 20x1, Wheel Co. purchased a machine for P2,000,000 and established an annual straight-line depreciation rate of 10% with no residual value. During 20x5 Wheel determined that the machine will not be economically useful in its production process after December 31, 20x5. Wheel estimated that the machine had no residual value at December
31, 20x5, and would be disposed of in early 20x6 at a cost
P50,000. In its profit or loss for the year ended December 31,
20x5. What amount and type of charge should Wheel report
for the machine?
Impairment loss
1,250,000
1,000,000
Depreciation
a.
b.
200,000
1,050,000
50,000
с.
200,000
d. 1,200,000
Transcribed Image Text:31, 20x5, and would be disposed of in early 20x6 at a cost P50,000. In its profit or loss for the year ended December 31, 20x5. What amount and type of charge should Wheel report for the machine? Impairment loss 1,250,000 1,000,000 Depreciation a. b. 200,000 1,050,000 50,000 с. 200,000 d. 1,200,000
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