Lone Star Equipment Ltd., has a December 31st year-end and purchased a new piece of equipment on January 1, 2022 and immediately started using the equipment in their factory. Lone Star paid $275,790 for the asset composed of the purchase price of $200,000, $10,000 in non-refundable taxes and $5,000 in shipping costs.

Other pertinent information follows:

- Lone Star uses the straight-line method to depreciate all of its equipment.

- The equipment is expected to generate cash flows of $28,500 per year over its estimated five-year useful life with all cash flow occurring at the end of the year. At the end of the asset's useful life, Lone Star expects to sell the asset, at auction, for $32,000. The auctioneer charges a 23% sales commission.

- Lone Star's management determines that 5% is the appropriate discount rate to use to account for the time value of money.

- On December 31, 2022, the market price of a similar piece of equipment is $127,650. Transaction costs include non-refundable taxes and shipping costs of $17,000.

Required:

Determine the value of Lone Star's new equipment purchase as at their year-end of December 31, 2022 using each of the following measurement bases:

a) Historical Cost

(4 marks)

b) Fair Value

(4 marks)

c) Value in Use

(4 marks)

d) Current Replacement Cost

(2 marks)