Question
A company has a machine in its statement of financial position at a carrying amount of GH300,000. The machine is used to manufacture the companys
A company has a machine in its statement of financial position at a carrying amount of GH300,000. The machine is used to manufacture the companys best-selling product range, but the entry of a new competitor to the market has severely affected sales. As a result, the company believes that the future sales of the product over the next three years will be only GH150,000, GH100,000 and GH50,000. The asset will then be sold for GH25,000. An offer has been received to buy the machine immediately for GH240,000, but the company would have to pay shipping costs of GH5,000. The risk-free market rate of interest is 10%. Market changes indicate that the asset may be impaired and so the recoverable amount for the asset must be calculated.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started