Inpairment of assets – costs of restoration

This topic has 1 reply, 2 voices, and was last updated 7 years ago by jetavi.

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October 29, 2018 at 2:29 am #480090
fusion
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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?
October 30, 2018 at 9:38 am #480207
jetavi
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You surely be having an answer for this question, isn’t it? What is the CA as per the solution?
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