Reference no: EM132812697

On January 1, 2020, Messy Life Corporation decided to dispose of an item of plant that is carried in its records at a cost of P900,000, with accumulated depreciation of P160,000. Depreciation on the plant since it was originally acquired has been charged at P10,000 per month. The plant will continue to be operated until it is sold, at which time the operations of the plant will be outsourced. The company undertook all the necessary actions to be able to classify the asset as held for sale. It is estimated that it could sell that plant for its fair value, P720,000, incurring P20,000 selling costs in the process. The plant has been depreciated at an amount of P10,000 per month On March 31, 2020, the plant had not been sold but, due to a shortage of this type of plant, there had been an increase in the fair value to P770,000. On June 30, 2020, Messy Life sold the plant for P785,000 incurring P25,000 selling costs.

Problem 1: The impairment loss to be recognized on January 1, 2020 (date of classification as held for sale) is _____
Problem 2: The depreciation expense to be recognized in 2020 is _____
Problem 3: The gain to be recognized in profit or loss as a result of increase in the fair value of the plant is