Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question Z_(10 Marks). Each part is independent. Part (5 marka) Omega Company, a public company, must perform an impairment test on some specialized equipment that

image text in transcribed
Question Z_(10 Marks). Each part is independent. Part (5 marka) Omega Company, a public company, must perform an impairment test on some specialized equipment that it owns. The equipment will produce the following cash flows at the end of each year: Year 585,000 Year 2, 560,000; Year 3, S60,000 and Year 4, $60,000. The discount rate is 6%. The value in use, which is also equal to the fair value as equipment will not be sold, is equal to the present value of the estimated cash flows from the equipment Required: 1. What is the value in use (1.c. present value of estimated cash flows) of the equipment to the nearest dollar for this equipment? Show calculations. You may use your calculator, present value tables... (3 marks) 2. There are three levels of inputs under IFRS 13. At what level 4, 2 or 3) will the type of inputs used by Omega Co. in determining the fair value of the specialized equipment be categorized? Briefly explain why (2 marks) Part 1 (5 marks) On January 1, 2020 Lance Co, issued five-year bonds with a face value of $400,000 and a stated interest rate of 10% with interest payable annually on January 1. The bonds were sold inued to yield a market rate of 8%. The se price of the bonds is the sum of the present value of the interest payments and of the face amount at maturity discounted at the market rate Compute the following: Present value of annual interest payments 1. Present value of the face amount of $400,000 due in 5 years: Lasne Price of bonds 11

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Dyslexia A Practitioners Handbook

Authors: Gavin Reid

5th Edition

1118980107, 9781118980101

More Books

Students also viewed these Accounting questions