Reference no: EM132978027

Problem 1 - Callous Company insured the life of the president for P2,000,000, the entity being the beneficiary of an ordinary life policy. The annual premium is P60,000. The policy was dated January 1, 2019 and carried the following cash surrender value. End of the Policy Cash surrender value 2019 - 2020 - 2021 60,000

2022 84,000

2023 116,000

The entity followed the calendar year as the accounting period. The president died on September 30, 2022 and the policy was collected December 1, 2022.

Required -

1. Provide the necessary journal entries.

2. Compute for the following:

3. Gain on life insurance settlement

4. The updated cash surrender value before settlement or claim.

Problem 2 - Karina Company acquired a commercial land with a building on January 1, 2020 with separate acquisition price of P10,000,000 and P5,000,000 respectively. At that date, the building had a useful life of 30 years. The fair values of the land and building on December 31, 2020 were P12,000,000 and P7,000,000 while on December 31, 2021 the fair values were P11,000,000 and P6,500,000 respectively.

Required -

1. Assuming the investment property is accounted at cost model, compute for the following:

2. Carrying amount on December 31, 2020 and 2021.

3. Expense or income recognized in profit or loss (Income Statement)