The Ardéco printing works is testing a rotary press with a carrying amount of 380,000 that will be used for two more years. The expected net operating cash flows, received at year-end, are 165,000 for year 1 and 193,600 for year 2. At the end of year 2, reselling the press should provide a net cash flow of 48,400. The discount rate (given) is 10 %. Current fair value less costs of disposal is 340,000. Calculate value in use, recoverable amount and the impairment loss.
- Net operating cash flow, year 1
- 165,000
- Net operating cash flow, year 2
- 193,600
- Net disposal cash flow at the end of year 2
- 48,400
- Discount rate (given)
- 10 %
- Carrying amount of the press
- 380,000
- Fair value less costs of disposal (given)
- 340,000