The assistant financial controller of the Maryland Group(MG), a public listed company,

has identified the matters below which she believes may indicate an impairment to one or

more assets:

MG owns and operates an item of plant that cost $2,600,000 and had accumulated

depreciation of $1,700,000 at 1 October 2014. It is being depreciated at 12% on cost. On 1

April 2015 (exactly half way through the year) the plant was damaged when a factory

vehicle collided into it. Due to the unavailability of replacement parts, it is not possible to

repair the plant, but it still operates, albeit at a reduced capacity. Also it is expected that as

a result of the damage the remaining life of the plant from the date of the damage will be

only two years.

Based on its reduced capacity, the estimated present value of the plant in use is $700,000.

The plant has a current disposal value of $120,000 (which will be nil in two years' time),

but MG has been offered a trade-in value of $900,000 against a replacement machine

which has a cost of $1,000,000 (there would be no disposal costs for the replaced plant).

MG will not replace the plant because it is worried about the long-term demand for the

produce produced by the plant. The trade-in value is only available if the plant is replaced.

Required

Prepare extracts from the statement of financial position and income statement of the

Portland Group in respect of the plant for the year ended 30 September 2015, if the

plant is not replaced. Your answer should explain how you arrived at your figure