Reference no: EM132880936
On December 31, 2020, Amara Co. committed to a plan to sell a manufacturing facility in its present condition and classifies the facility as held for sale at this date. After a firm purchase commitment is obtained, the buyer's inspection of the property identifies environmental damage not previously known to exist. Amara is required by the buyer to make good the damage, which will extend the period required to complete the sale beyond one year. However, the entity has initiated actions to make good the damage, and satisfactory rectification of the damage is highly probable. On December 31, 2020, the carrying value of the facility is P4,000,000 and its fair market value is P3,600,000.
Problem 1: In its December 31, 2020 balance sheet, Amara Co. should properly report this manufacturing facility as:
a. should no longer be included in the December 31,2020 balance sheet
b. should be included among the property , plant , and equipment at P4,000,000
c. should be included among the property , plant, and equipment a P3,600,000
d. should be reported separately as non-current asset held for disposal and valued at P3,600,000
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