Reference no: EM132672608

Hilarious Company provided the following data pertaining to a machinery on December 31, 2019

Cost of Machinery 4,500,000

Original residual value 500,000

Accumulated Depreciation 2,400,000

Actual life 5 years

Effective life 3 years

The following occurred during the life of the machinery:

• The entity revalued the machinery on December 31, 2019 and determined that its replacement cost is P5,000,000. The entity also made the following changes in estimates:

a. The revised residual value is 300,000.

b. Remaining economic life is 5 years.

• On December 31, 2020, the entity determined that the replacement cost of the machinery is P3,800,000. The entity made the necessary revaluation.
• On December 31, 2022, the entity determined that the replacement cost of the machinery is P4,300,000. The entity made the necessary revaluation.
• On May 17, 2023, the entity sold the machinery at P650,000. The entity paid broker's commission of P10,000.

Required:

Question 1. Compute the OCI item balance as of December 31, 2019.

Question 2. Compute the revaluation decrease on December 31, 2020 to be presented in the 2020 Statement of Comprehensive income as:

a. Component of profit or loss.

b. Component of other comprehensive.

Question 3. Compute the revaluation increase on December 31, 2022 to be presented in the 2022 Statement of Comprehensive income as:

c. Component of profit or loss.

d. Component of other comprehensive.

Question 4. Compute the carrying amount of the machinery to be presented in the statement of financial position as of December 31, 2022.

Question 5. Compute the gain or (loss) on the disposal of the machinery.

Question 6. Compute the amount of OCI item that is transferred directly to the retained earnings in 2023.