Epsilon is an entity which prepares financial statements to 30 September each year.

(c) Impairment review
During the final few months of the accounting period ending on 30 September 2018, Epsilon experienced difficult trading conditions. These difficulties did not affect the ability of Epsilon to operate as a going concern. In an impairment review of the machine at 30 September 2018, the directors of Epsilon estimated that the machine’s recoverable amount was $2·5 million. (4 marks)

Relevant exchange rates (francs to $1) are as follows:
– 1 April 2018 – 10 francs to $1.
– 30 April 2018 – 9·5 francs to $1.
– 31 July 2018 – 9 francs to $1.
– 30 September 2018 – 8 francs to $1.
– Average rate for the period from 1 April 2018 to 30 September 2018 – 9·2 francs to $1.

Required:
Explain and show with appropriate calculations how the above events would be reported in the financial statements of Epsilon for the year ended 30 September 2018. Marks will be awarded for BOTH figures AND explanations.