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Have a nice day, Mike .
I have a question in my lecture note I have not understood and I would like to ask you:
My question as follow:
Five years ago, W acquired an machine at a cost of $30,000, estimated useful llife of 10 years, straight line depreciation.
After 2 years, asset was subject to impairment review, recoverable amount was 16,000.
Now, recoverable amount is 24,000.
requirement of question is to show the accounting for reversal of impairment loss.
In my lecturer’s answer, carrying value in year 5 is 10,000(16*5/8).
However, in my opinion, CV must be 6000(16*3/8) 3 is period of time from the year recoverable amount was recognised to year 5.
Am i or answer wrong?
Thank you in advance.Cv after 1 year is 27,000
After 2 years is 24,000 but then impaired down to 16,000
8 years remaining after end of year 2 = 2,000 per year depreciation
After year 3 cv is 14,000
After year 4 cv is 12,000 and
After year 5 cv is 10,000
I think I agree with your lecturer’s answer
What you have calculated is the depreciation since impairment up until “today” ie 3 years x 16,000 / 8
Sorry to disappoint! 🙂
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