Lokton plc has a piece of equipment which it bought on 1 January 2014 for £1,000,000. The equipment has been depreciated annually at a rate of 10% on cost (with a zero disposal value assumed at the end of its useful life). At the year-end on 30 December 2020, the fair value of the equipment was £320,000. The value in use of this asset is estimated at £280,000. The current costs to sell the equipment amount to 550.000

FINANCIAL ACCOUNTING
10th Edition
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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Lokton plc has a piece of equipment which it bought on 1 January 2014 for £1,000,000. The equipment
has been depreciated annually at a rate of 10% on cost (with a zero disposal value assumed at the end of
its useful life). At the year-end on 30 December 2020, the fair value of the equipment was £320,000. The
value in use of this asset is estimated at £280,000. The current costs to sell the equipment amount to
£50,000.
What is the impairment loss?
Select one:
O a. £20,000
O b. £0
O c. £2,000
d. £80,000
e. £120,000
f. £251,441
g. £198,297
Transcribed Image Text:Lokton plc has a piece of equipment which it bought on 1 January 2014 for £1,000,000. The equipment has been depreciated annually at a rate of 10% on cost (with a zero disposal value assumed at the end of its useful life). At the year-end on 30 December 2020, the fair value of the equipment was £320,000. The value in use of this asset is estimated at £280,000. The current costs to sell the equipment amount to £50,000. What is the impairment loss? Select one: O a. £20,000 O b. £0 O c. £2,000 d. £80,000 e. £120,000 f. £251,441 g. £198,297
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