Lichen Plc owns a machine that has a carrying value amount of $85,000 at the year-end of 31 March 2023. Its market value is $78,000 and costs of disposal are estimated at $2,500. A new machine would cost $150,000. Lichen Plc expects it to produce net cash flows of $30,000 per annum for the next three years. The cost of capital of Lichen Plc is 8%. Required: What is the impairment loss on the machine to be recognised in the financial statements at 31 March 2023 (Enter your answer to the nearest whole $).
Lichen Plc owns a machine that has a carrying value amount of $85,000 at the year-end of 31 March 2023. Its market value is $78,000 and costs of disposal are estimated at $2,500. A new machine would cost $150,000. Lichen Plc expects it to produce net cash flows of $30,000 per annum for the next three years. The cost of capital of Lichen Plc is 8%. Required: What is the impairment loss on the machine to be recognised in the financial statements at 31 March 2023 (Enter your answer to the nearest whole $).
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Lichen Plc owns a machine that has a carrying value amount of $85,000 at the year-end of 31 March 2023. Its market value is $78,000 and costs of disposal are estimated at $2,500. A new machine would cost $150,000. Lichen Plc expects it to produce net cash flows of $30,000 per annum for the next three years. The cost of capital of Lichen Plc is 8%.
Required:
What is the impairment loss on the machine to be recognised in the financial statements at 31 March 2023 (Enter your answer to the nearest whole $).
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