Question

Diamond Berhad starts a new manufacturing business on 2 January 2018 building immediately after starting the operation at a price of RM60,000,000. The useful life of the building is 20 years and it is estimated that there is no residual value for this building. The building has been depreciated using a straight line method. Several other buildings in the immediate area have recently been left vacant At the end of 2016, Diamond Berhad estimates the followings relating to the building: 1) The remaining uselul life of the building is 13 years; 2) The cash inflows expected to be generated from the building is RM3,500,000 per year and expenses to maintain the building is RM1.000.000 3) The fair value of the building is RM2,300,000; 4) Legal foes and stamp duties paid in relating to disposal of the building are RM150,000 and RM100,000 respectively; and 5) The market prevailing interest rate is 7% Required: Explain clearly whether or not the building is impaired. ii) Prepare the partial statement of financial position for the company as at 31 December 2016 after all financial year end adjustments are done.

Answer 1

This answer based on the observation made from the question the question itself is not clarity ,image is not clear year is taken as the starting 2015 but it is not clarity in image

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