On January 1, 2020, HOWLSCo. acquired an investment property at a total cost of P25,000,000. At December 31, 2020, the carrying value of the property in the company’s books is P30,000,000. On December 31, 2020, HOWLSdecided to use the property and immediately reclassified it as plant asset. 1.What would be the initial cost of the plant asset if it has a fair value of P2,000,000 at the date of conversion? 2.What amount of revaluation surplus should HOWLSrecognize at the time of conversion?
On January 1, 2020, HOWLSCo. acquired an investment property at a total cost of P25,000,000. At December 31, 2020, the carrying value of the property in the company’s books is P30,000,000. On December 31, 2020, HOWLSdecided to use the property and immediately reclassified it as plant asset. 1.What would be the initial cost of the plant asset if it has a fair value of P2,000,000 at the date of conversion? 2.What amount of revaluation surplus should HOWLSrecognize at the time of conversion?
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter7: Operating Assets
Section: Chapter Questions
Problem 11MCQ
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On January 1, 2020, HOWLSCo. acquired an investment property at a total cost of P25,000,000. At December 31, 2020, the carrying value of the property in the company’s books is P30,000,000. On December 31, 2020, HOWLSdecided to use the property and immediately reclassified it as plant asset.
1.What would be the initial cost of the plant asset if it has a fair value of P2,000,000 at the date of conversion?
2.What amount of revaluation surplus should HOWLSrecognize at the time of conversion?
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