FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Asset Impairment
Green Light Ltd (GLL) tested a machine for impairment on 31 December 2018. The machine was carried at
Year Future net cash flow ('000)
2019 22,165
2020 21,450
2021 20,550
2022 24,725
2023 25,325
2024 24,825
2025 24,123
2026 25,533
2027 24,234
2028 22,850
Suppose in the years 2019-2021, no event occurred that required the machine's recoverable amount to be re-estimated. On 31 December 2022, costs of $25,000 were incurred to enhance the machine's performance. Revised estimated cash flows of the machine in management's most recent budget were as follows:
Year Future net cash flow ('000)
2023 30,321
2024 32,750
2025 31,721
2026 31,950
2027 33,100
2028 27,999
With reference to the machine, answer the following questions.
(a) Determine the impairment loss at 31 December 2018. Show your workings.
(b) Prepare the accounting
(c) Prepare the accounting journal entries for the reversal of impairment loss on 31 December 2022. Show your workings.
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