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Good Drugs and Pharmaceuticals Ltd. acquired a sachet filling machine on 1st April, 20X1 for 60 lakhs. The machine was expected to have a
Good Drugs and Pharmaceuticals Ltd. acquired a sachet filling machine on 1st April, 20X1 for 60 lakhs. The machine was expected to have a productive life of 6 years. At the end of financial year 20X1-20X2 the carrying amount was 41 lakhs. A short circuit occurred in this financial year but luckily the machine did not get badly damaged and was still in working order at the close of the financial year. The machine was expected to fetch 36 lakhs, if sold in the market. The machine by itself is not capable of generating cash flows. However, the smallest group of assets comprising of this machine also, is capable of generating cash flows of 54 crore per annum and has a carrying amount of 3.46 crore. All such machines put together could fetch a sum of 4.44 crore if disposed. Discuss the applicability of Impairment loss.
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