40

Lichen Ltd owns a machine that has a

carrying amount of $85,000

at the year end

of 31 March 20X9. Its

market value is $78,000

and

costs of disposal

are estimated

at

$2,500

.

A new machine would cost $150,000.

Lichen Ltd expects to produce

net

cash flows of $30,000 per annum for the next three years

. The

cost of capital

of

Lichen Ltd is

8%

.

What is the

impairment loss on the machine

to be recognised in the financial

statements at 31 March 20X9?