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An oil exploration company has an obligation to restore the mining site after ceasing operation. The cost of restoration recognised is $5million. The CA of the mine is $14million.
The FV less cost of disposal is $11million with the buyer assuming the liability to restore the site in future.
VIU is $13million which excludes the restoration costs.
Calculate the RA of the mining site.Why do we need to deduct restoration costs from CA when calculating impairment loss?
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