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What do I do for these adjustments ? On 30 September 2019, Deedee realised that certain items of machinery appeared to have suffered a permanent
What do I do for these adjustments ?
On 30 September 2019, Deedee realised that certain items of machinery appeared to have suffered a permanent diminution in value. The inventory produced by the machines was being sold below its costs, and this occurrence had affected the value of the productive machinery. The carrying value of those machines is 290,000, and their fair value less costs to sell is estimated at 120,000. The anticipated net cash inflows for the machiles are now 100,000 per annum for the next three years. A market discount rate of 10% is to be used in any present value calculations, and the discounting factors are presented below: Year Year 1 Year 2 Year 3 Discounting factor at 10% (PVIF) 0.909 I 0.826 0.751
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