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Question 2 Payar Bhd purchased a computerised equipment for RM4 million on 1 October 2020 to improve its manufacturing process. The company's policy is to

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Question 2 Payar Bhd purchased a computerised equipment for RM4 million on 1 October 2020 to improve its manufacturing process. The company's policy is to depreciate the computer equipment by 25% per annum on the straight-line basis On 30 September 2021, the company discovered that the manufacturer of the computerised equipment was now selling the same system for RM2-5 million. The discounted projected cash flows from the use of the asset for its remaining life of 3 years, was estimated at RM4.7 million. The directors assessed the fair value less costs of disposal of the equipment to be approximately RM2 million. The directors of Payar Bhd decided to write down the equipment to the new selling price of RM2.5 million. Required: (a) Discuss whether the decision by the directors to write down the equipment to the new selling price of RM2.5 million is appropriate. (8 marks) (b) Advise the directors whether the equipment is impaired on 30 September 2021 and at what value the directors should reflect the equipment in the financial statement as at 30 September 2021. Show all relevant computations. (12 marks)

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