On 2 January 2011, Mekar Engineering Berhad had purchased a high-tech equipment for RM1,000,000 that was used to produce Product Zyl. Other cost incurred in relating to the acquisition of this equipment are transportation cost of RM120,000; import duty of RM50,000 and installation costs of RM30,000. The annual repairs and maintenance costs is RM50,000 Mekar Engineering Berhad had spent RM350,000 to further improved the performance of the equipment in the early of 2014. The improvement costs has successfully increased the production level by 20 percent compared to the previous production level. Company's policy required that the equipment been depreciated using the straight-line method, an estimated useful life of 20 years and the estimated residual value of 10 percent of its acquisition cot The company's operations have experienced significant losses for the past two years as the demand for the Product Zyi has declined significantly. In the 2018 financial year which ended on 31 December, the remaining useful life of the equipment is estimated to be only seven years The annual cash inflow that can be generated from the utilization of the equipment is RM230,000 and the expected total cost to maintain the equipment will be RM80,000 per year. The fair value of the equipment as estimated by a professional valuer is RM800,000 and it is expected that Mekar Engineering Berhad will have to spend RM40,000 to sell the equipment. A detail analysis on the current economic scenario was made and the Chief Financial Officer of Mekar Engineering Berhad estimated that the market prevailing interest rate for the company would be 12% (1) Explain whether Mekar Engineering Berhad need to conduct an impairment test as outlined in MFRS 136 Impairment of Assets for the above equipment. (2 markah/marks) 2) Explain if Mekar Engineering Berhad should recognized an impairment loss for the above equipment in accordance with the requirement of MFRS 136 Impairment of Assets. (14 markah/marks (3) Determine the amount of the loss if any and prepare the required journal entry to record the loss (3 markah/marks) (4) Determine the carrying amount of the equipment after the recognition of the impairment loss. Compute the depreciation expenses to be provided for the equipment for the financial year of 2018 based on the new carrying amount and prepare the required journal entry to record the depreciation expenses. (5 markah/marks) (5) Prepare a partial Stare Engineering Berhad to disclose the equipment ASHLION as at 31 December 2018 for Mekar (4 markah/marks) On 2 January 2011, Mekar Engineering Berhad had purchased a high-tech equipment for RM1,000,000 that was used to produce Product Zyl. Other cost incurred in relating to the acquisition of this equipment are transportation cost of RM120,000; import duty of RM50,000 and installation costs of RM30,000. The annual repairs and maintenance costs is RM50,000 Mekar Engineering Berhad had spent RM350,000 to further improved the performance of the equipment in the early of 2014. The improvement costs has successfully increased the production level by 20 percent compared to the previous production level. Company's policy required that the equipment been depreciated using the straight-line method, an estimated useful life of 20 years and the estimated residual value of 10 percent of its acquisition cot The company's operations have experienced significant losses for the past two years as the demand for the Product Zyi has declined significantly. In the 2018 financial year which ended on 31 December, the remaining useful life of the equipment is estimated to be only seven years The annual cash inflow that can be generated from the utilization of the equipment is RM230,000 and the expected total cost to maintain the equipment will be RM80,000 per year. The fair value of the equipment as estimated by a professional valuer is RM800,000 and it is expected that Mekar Engineering Berhad will have to spend RM40,000 to sell the equipment. A detail analysis on the current economic scenario was made and the Chief Financial Officer of Mekar Engineering Berhad estimated that the market prevailing interest rate for the company would be 12% (1) Explain whether Mekar Engineering Berhad need to conduct an impairment test as outlined in MFRS 136 Impairment of Assets for the above equipment. (2 markah/marks) 2) Explain if Mekar Engineering Berhad should recognized an impairment loss for the above equipment in accordance with the requirement of MFRS 136 Impairment of Assets. (14 markah/marks (3) Determine the amount of the loss if any and prepare the required journal entry to record the loss (3 markah/marks) (4) Determine the carrying amount of the equipment after the recognition of the impairment loss. Compute the depreciation expenses to be provided for the equipment for the financial year of 2018 based on the new carrying amount and prepare the required journal entry to record the depreciation expenses. (5 markah/marks) (5) Prepare a partial Stare Engineering Berhad to disclose the equipment ASHLION as at 31 December 2018 for Mekar (4 markah/marks)