Question
n January 1, 2020, Marvelous Company owned a group of machines with the following aggregate cost and accumulated depreciation: Machinery 135,000,000 Accum. depreciation 37,500,000 The
n January 1, 2020, Marvelous Company owned a group of machines with the following aggregate cost and accumulated depreciation:
Machinery 135,000,000
Accum. depreciation 37,500,000
The machine has an average remaining life of four years and it has been determined that this group of machines constitutes a cash generating unit.
The fair value less cost of disposal of this group of machines in an active market is determined to be P 72,000,000.
Based on supportable and reasonable assumptions, the financial forecast for this group of machines reveals the following cash inflows and cash outflows for the next four years:
Cash Inflows | Cash Outflows | |
2020 | 45,000,000 | 18,000,000 |
2021 | 48,750,000 | 26,250,000 |
2022 | 41,250,000 | 18,750,000 |
2023 | 24,000,000 | 6,000,000 |
It is believed that a discount rate of 8% is reflective of time value of money. The table of present value shows the following present value of 1 at 8%:
Period | Present Value of 1 |
1 | 0.930 |
2 | 0.857 |
3 | 0.794 |
4 | 0.735 |
How much is the impairment loss?
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