Calculate Impairment Loss Amount: A machine in vertex garments has been damaged

due to factory flooding. Calculate the impairment loss amount under GAAP and IFRS based on the

following information:

Carrying amount = 17,000

Undiscounted Future expected cash flows:

o Year 1: 3000

o Year 2: 5000

o Year 3: 7000

Fair value if sold today = 15000

Cost to sell = 1500

Cost of capital for Vertex is 10%

a. What is the total undiscounted future expected cash flow?

b. What is the total present value of the expected future cash flows (hint: use the following

formula: FV/(1+r)^n

c. What is the impairment loss under IFRS?

d. What is the impairment loss under GAAP?

(8)

Question 5:

The Spot rate (BDT/USD) increased by 6%. On the other hand, current inflation in Bangladesh is

3.5% and the price level in USA decreased by 2%. What is the change in real exchange rate

(USD/BDT)? (2)