G Ltd owns a specific machine with a carrying amount of $106 667 at 31 December 2014, for which there is an active market.

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 at 31 December 2014.

The machine can at this stage be disposed of to a knowledgeable willing buyer for $107 000. 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 working order. The technician charged $2 000, but has not been paid.

G Ltd is of the opinion that this asset will generate net cash inflows of $40 000 per annum over the next 4 years and this was confirmed in the most recent cash flow budget of management. 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 rate for this type of asset is 15.4%per annum and the tax rate is 30%.

There have been numerous reports in the press in the last few weeks before the company’s financial year end indicating that this type of asset is heading for major technological innovations.

Required

Calculate the following:

1. The net selling price of the asset  
2. The value in use of the asset        
3. The impairment loss that would result from the above information
4. The depreciation for the year ended 2014 and
5. The depreciation for the next and subsequent years