Question

In? 2011, ZeeTee Inc. acquired production machinery at a cost of $ 650 comma 000?, which now has a accumulated depreciation of $ 390 comma 000. The undiscounted cash flows from use of the machinery is $ 230 comma 000. and? it's fair value is $ 199 comma 000. What amount should Condor recognize as a loss on? impairment?

Answer 1

	Loss on Impairment	=	$     61,000
	Workings:
	Book Value of Machinery
	Cost of Machinery	=	$ 6,50,000
Less:	Accumulated Depreciation	=	$ 3,90,000
	Book Value	=	$ 2,60,000
	Future Cash Flows from use of Machinery	=	$ 2,30,000
	Book Value is more than Future Cash Flows, therefore there is need for impairment
	Loss on Impairment to be recognized:
	Book Value	=	$ 2,60,000
Less:	Fair Value	=	$ 1,99,000
	Loss on Impairment	=	$     61,000