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Lokton plc has a piece of equipment which it bought on 1 January 2014 for £2,000,000. 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 £640,000. The value in use of this asset is estimated at £560,000. The current costs to sell the equipment amount to £100,000. What is the impairment loss? a. £502,882 b. £2,000 c. £160,000 d. £0 e. £40,000 f. £396,594 g. £240,000

Lokton plc has a piece of equipment which it bought on 1 January 2014 for £2,000,000. 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 £640,000. The value in use of this asset is estimated at £560,000. The current costs to sell the equipment amount to £100,000. What is the impairment loss? a. £502,882 b. £2,000 c. £160,000 d. £0 e. £40,000 f. £396,594 g. £240,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Lokton plc has a piece of equipment which it bought on 1 January 2014 for £2,000,000. 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 £640,000. The value in use of this asset is estimated at £560,000. The current costs to sell the equipment amount to £100,000.

What is the impairment loss?

a.
£502,882
b.

£2,000

c.
£160,000
d.
£0
e.
£40,000
f.
£396,594
g.
£240,000
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