Question 12 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 £).

Question 12 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 £).

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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