Homework Answers
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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