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BuildMax acquired a production plant for $800,000 with an estimated residual value of $55,000 and an estimated life of five years. The company uses the
BuildMax acquired a production plant for $800,000 with an estimated residual value of $55,000 and an estimated life of five years. The company uses the straight-line depreciation method. Due to economic factors, the estimated net cash inflows are $240,000 on 31 March 20X3, $190,000 on 31 March 20X4, and $180,000 on 31 March 20X5. The values of $1 at the end of each year are 0.90 for year 1, 0.84 for year 2, and 0.78 for year 3. Required: Conduct an impairment test and prepare the financial statement disclosures as of 31 March 20X3.
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