Value in use

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December 12, 2019 at 10:39 am #555723
arunotes
Member
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Hi sir, may I knw if the historical cost machine is 50k and residual value is 20k and useful life 5 years. To replace the machine with a new version would cost 70k and residual value is 30k and useful life is 4 years.

When we calculate the value in use, for the residual value I have to use 20k or 30k?

Thanks sir
December 13, 2019 at 9:53 pm #555878
P2-D2
Keymaster
- Topics: 4
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Hi,

The residual value is an estimate so any changes in the estimate are dealt with prospectively, and so you would work the deprecation based on the new residual value of 30k.

Thanks
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