HealthTech Solutions acquired a biotechnology lab on 1 January 20X0 for $2,500,000 with an estimated residual value
Question:
HealthTech Solutions acquired a biotechnology lab on 1 January 20X0 for $2,500,000 with an estimated residual value of $250,000 and an estimated useful life of 10 years. The company uses the straight-line depreciation method. Due to advancements in biotechnology, the company now forecasts the following net cash inflows: $400,000 on 31 December 20X3, $350,000 on 31 December 20X4, and $300,000 on 31 December 20X5. The present values of $1 at the end of each year, using a discount rate of 6%, are: 0.94 for year 1, 0.89 for year 2, and 0.84 for year 3. Required: Calculate the impairment loss and prepare a revised income statement reflecting these changes as of 31 December 20X3.
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones