Question
TechnoBuild acquired a production plant at a cost of $900,000 with an estimated residual value of $60,000 and an estimated life of six years. The
TechnoBuild acquired a production plant at a cost of $900,000 with an estimated residual value of $60,000 and an estimated life of six years. The company uses the straight-line depreciation method. Due to market conditions, TechnoBuild estimates the following net cash inflows from operating the plant: $250,000 on 31 December 20X3, $200,000 on 31 December 20X4, and $190,000 on 31 December 20X5. The values of $1 at the end of each year are 0.92 for year 1, 0.85 for year 2, and 0.78 for year 3. Required: Prepare the journal entries for annual depreciation and any necessary impairment loss as of 31 December 20X3.
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