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4 Due to a change in Jay Ltd's production plans, an item of machinery with a carrying value of GH55,000 at 31 December 2018 (after
4 Due to a change in Jay Ltd's production plans, an item of machinery with a carrying value of GH55,000 at 31 December 2018 (after adjusting for depreciation for the year) may be impaired due to a change in use. An impairment test conducted on 31 December 2018, revealed its fair value less cost of disposal to be GH5,000. The machine is now expected to generate an annual net income of GH10,000 for the next three years at which point the asset would be sold for GH12,000. An appropriate discount rate is 10%. Jay charges depreciation at 20% on reducing balance method on machinery. Note: 0 0 The present value of ordinary annuity of GH1 at 10% for one year, two years and three years are 0.909,1.736 and 2.487 respectively. The present value of GH1 at 10% for one year, two years and three years 0.909, 0.826 and 0.751 respectively. Required: In accordance with IAS 36: Impairment of Assets, explain with justification the required accounting treatment in the financial statements of Jay Ltd for the year ended 31 December 2018
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