Question

ABC purchased a machine on Jan 1, 2016 for $92788 with an estimated useful life of...

ABC purchased a machine on Jan 1, 2016 for $92788 with an estimated useful life of 12 years and no salvage value ABC uses the straight line depreciation method On December 31, 2018 technological changes suggest the machine may be impaired On December 31, 2018 the machine is expected to generate net cash flows of $6014 per year over its remaining life On December 31, 2018 the fair value of the machine is $45126.42 On Dec 31, 2018 the carrying value of the machine before any impairment loss is: Answer On Dec 31, 2018 the impairment loss, if any, is (enter as a negative amount): Answer On Dec 31, 2018 the carrying value of the machine after any impairment loss is: Answer

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Answer #1
Cost of asset 92788
Less: Salvage value' 0
Depreciable ccost 92788
Divide: Life 12
Annual depreciation 7732
Book value on Dec31 2018
Cost of assets 92788
Less: Accumulated dep (7732*3) 23196
Carrying value of asset 69592
Fair value of cost 45126.42
Cashflows in future (6014*9) 54126
FMV of asset at 31.12.18 54126
(higher of 45126.42 or 54126)
Carrying value of asset 69592
Impairment loss 15466
(69592-54126)
Carrying value on 31.12.18 after impairment:
Carrying value before impairment 69592
Less: Impairment loss -15466
Carrying value after impairment 54126
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