MC Question 18
Aphrodite Co has a year end of 31 December and operates a factory which makes computer chips for mobile phones.
It purchased a machine on 1 July 20X3 for $80,000 which had a useful life of ten years and is depreciated on the
straight-line basis, time apportioned in the years of acquisition and disposal.
The machine was revalued to $81,000 on 1 July 20X4.
There was no change to its useful life at that date.
A fire at the factory on 1 October 20X6 damaged the machine leaving it with a lower operating capacity.
The accountant considers that Aphrodite Co will need to recognise an impairment loss in relation to this damage.
The accountant has ascertained the following information at 1 October 20X6:
| (1) | The carrying amount of the machine is $60,750. |
|---|---|
| (2) | An equivalent new machine would cost $90,000. |
| (3) | The machine could be sold in its current condition for a gross amount of $45,000. Dismantling costs would amount |
| (4) | In its current condition, the machine could operate for three more years which gives it a value in use figure of |
What is the total impairment loss associated with Aphrodite Co’s machine at 1 October 20X6?
A $nil
B $17,750
C $22,065
D $15,750