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Dwng Xathity Company purchased equipment for $1,000,000 and has depreciated it using the straight-line method for the past 5

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Answer #1

Annual depreciation = ($1000000-$200,000) / 10 years

= $80,000

Net book value of the equipment at the end of 5th year = $1,000,000 - $80,000*5

= $600,000

Loss on impairment = Carrying value of the assets - recoverable value

recoverable value = Lower of the fair value and future cash flows

  Loss on impairment = $600,000 - $450,000 = $150,000

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