Accompany owns a specific machine with a carrying amount of $106 667

at 31 December 2004, for which there is an active market. The machine

can, at this stage, be disposed of to a knowledgeable and willing buyer

for $107 000.

This machine initially cost $200 000 and is depreciated straight line over

7,5 years. A total of 3,5 years of the useful life of the machine has

already expired as at 31 December 2004.

Any broker involved in such a transaction will charge a fee of $2 000 and

the cost to dismantle and remove the asset will be $3 000. Just before

considering the recoverable amount of the asset, the asset was serviced

to ensure that it is in good condition. The technician charged $2 000

but has not yet been paid.

The company is of the opinion that this asset will generate net cash inflows

of $40 000 per annum over the next 4 years. The asset will be disposed

of for a net amount of $4 000 at the end of its useful life.

An appropriate after tax discount for this type of asset is 15,4% per annum

and the tax rate is 30%.

Required

Calculate the following:

i. The net selling price of the asset

ii. The value in use of the asset

iii. The impairment loss that result from the above information

iv. Depreciation for the year 2004 and

v. Depreciation for the next year and the years thereafter