Question
InfraBuild acquired a production plant costing $1,000,000, with an estimated residual value of $70,000 and an estimated life of seven years. The company uses the
InfraBuild acquired a production plant costing $1,000,000, with an estimated residual value of $70,000 and an estimated life of seven years. The company uses the units-of-production depreciation method. Given market shifts, the net cash inflows are estimated to be $270,000 on 30 September 20X3, $230,000 on 30 September 20X4, and $220,000 on 30 September 20X5. The values of $1 at the end of each year are 0.90 for year 1, 0.84 for year 2, and 0.79 for year 3. Required: Prepare an impairment test for the production plant as of 30 September 20X3, and update the depreciation schedule.
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