Part A (Z marks). Wong Company owns specialized equipment that was purchased in an acquisition of Liu Company. The equipment has a book value of $1,500,000. To perform an impairment test, according to IFRS, Wong must estimate the fair value of the equipment and has developed the following annual cash flow estimates related to the equipment based on internal information for the next 5 years. The equipment is assumed to have no residual value after the 5 years. Assume that the cash flows occur at the end of each year and the appropriate discount rate is 6%. Year 1-3 4-5 Required: Cash Flow Estimate $240,000 365,000 1. To the nearest dollar, what is the estimated fair value of the equipment (present value of expected cash flows)? (3 marks) Present Value of Estimated cash in flow = 640800+667950=1308750 1-3 4-5 240000 365000 2.67 1.83 640800 667950 2. Assuming that selling costs are negligible and that the fair value of the equipment computed above is its recoverable amount, is the equipment considered impaired and if so, what is the impairment loss? (2 marks) 3. There are three levels of inputs under IFRS 13. What type of inputs are used by Wong Company in the above acquisition of specialized equipment from Liu Company? As a result, what classification would be assigned to the specialized equipment? (2 marks)