On June 1, 2014, Starlet Company approved a plan to dispose of a business segment.

It is expected that the sale will

occur on April 30, 2015. On December 31, 2014, the carrying value of net assets of the segment was P4,000,000
and the net recoverable amount was P3,600,000. During 2014, the company paid employees severance and
relocation costs of P200,000 as a direct result of the discontinuing operation. The revenues and expenses of the
discontinuing segment during 2014 were:

Revenues Expenses
January 1 to June 1 3,000,000 4,000,000
June 1 to December 31 1,400,000 1,800,000

Income tax rate is 35%

1. How much will be reported as loss from ordinary activities of the discontinued segment during 2014?

On July 1, 2014, Blazer Company has a building with a cost of P4,000,000 and accumulated depreciation of
P1,600,000. On the same date, Blazer Company commits to a plan to sell the building by February 1, 2015. The
building has a fair value of P2,000,000 and it is estimated that the selling cost of the building will be P150,000. As of
July 1, 2014, the building has a remaining life of 15 years.

2. What is the amount to be reported as the carrying value of the building held for sale as of December 31, 2014?
3. What is the amount of loss to be recognized by Blazer Company in its income statement as a result of
reclassification?

Melvin Company plans to dispose of a group of net assets that form part a disposal group. The net assets at
December 31, 2014 are:

Carrying Value at December 31, 2014

Goodwill 6,000,000
PPE 18,000,000
Inventory 10,000,000
Financial asset ( profit of P2,000,000 recognized in equity) 7,000,000
Financial liabilities 4,000,000
Total 37,000,000

Before the date of reclassification, the PPE had a fair value of P16,000,000; the inventory has a net realizable value
of P9,000,000. The fair value less cost to sell of the disposal group is P25,000,000.

4. What amount of the impairment is allocated to the PPE?

5. What amount of the impairment is allocated to the Goodwill?
6. What amount of the impairment is allocated to the Inventory?
7. Immediately after classification as held for sale, what amount should be presented as the carrying value of the
disposal group?
8. Immediately after classification as held for sale, what amount of liability directly associated with the disposal group
should be presented in the liability section of the balance sheet?
9. Immediately after classification as held for sale of the disposal group, what amount should be disclosed separately
in equity relating to noncurrent asset held for sale?

Bumper Company has three lines of business, each of which was determined to be reportable segment. Bumper
Company sales aggregated P15,000,000 in 2014 of which segment #1 contributed 40%. Traceable costs were
P3,500,000 for September to November out of a total of P10,000,000 for the company as a whole. For internal
reporting, Bumper allocates common costs of P3,000,000 based on the ratio of a segment’s income before common
costs

10. In its 2014 financial statements, how much should Bumper report as operating profit for segment no. 1?