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In the production of spare parts, Syarikat Snoopy uses machinery. In December 2020, a rival launched its own collection of spare parts. Such spare parts
In the production of spare parts, Syarikat Snoopy uses machinery. In December 2020, a rival launched its own collection of spare parts. Such spare parts are sold at a much lower price. Thus, for the next three years, the company expects a 40 to 50 per cent decrease in sales.
The following information has been gathered for Syarikat Snoopy:
- At the date of calculation, the carrying value of the machinery is RM35,000.
- At present, the machinery is depreciated at a rate of 5 per cent on a straight-line basis and has a remaining useful life of five years.
- The value of the machinery is 12,000 on the second-hand market. It is estimated that the cost of selling the machinery would be RM3,000.
- The discounted net cash inflow from the machinery over the remaining useful life of the asset (including disposal proceeds) is valued at RM9,700.
- The current residual value of the machinery is estimated at RM1,200.
You are required to calculate the amount of impairment loss.
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