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IAS 36

On 1 July 2016, Sunshine Limited (SL) acquired four machines namely A, B, C and D. The

following information is available in respect of these machines:

A                     B                     C                     D

Cost (GH¢ in millions)                       200                  230                  90                    60

Expected useful life                            10 years           10 years           6 years             12 years

Active market value at 30 June          170                  300                  65                    No active

2017 (GH¢ in millions) market

Renewal cost (GH¢ in millions)         65                    85                    2                      1

        i.            The renewal would allow SL to use the machines for another five years and it is incurred at the end of year.

      ii.            SL uses the revaluation model for subsequent measurement of its assets.

    iii.            An independent value has estimated the value of machine ‘D’ at GH¢130 million.

Required:

Compare the carrying value of machines with fair values (active market value) to determine

the revaluation surplus or impairment loss and prepare extracts of financial statements.


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