Case Question – Wandsworth PLC
Information relevant to questions 39 – 43
Wandsworth PLC has a year end of 31 December and operates a factory which primarily involves in steel production. Wandsworth PLC purchased a machinery on 1 July 20X3 for $240,000 which had a useful life of ten years and is depreciated on the straight‐line basis, time apportioned in the years of acquisition and disposal. The machine was revalued to $243,000 on 1 July 20X4. There was no change to its useful life at that date.
A fire at the factory on 1 October 20X6 damaged the machine, leaving it with a lower production output. The senior accountant considers that Wandsworth PLC will need to recognise an impairment loss in relation to this damage and has ascertained the following information at 1 October 20X6:
(1) The carrying amount of the machine is $182,250.
(2) An equivalent new machine would cost $270,000.
(3) The machine could be sold in its current condition for a gross amount of $135,000. Dismantling cost would amount to $6,000.
(4) In its current condition, the machine could operate for three more years which gives it a value in use figure of $116,055.
39 In accordance with IAS 16 Property, Plant and Equipment, what is the depreciation charged to Wandsworth PLC’s statement of profit or loss in respect of the machine for the year ended 31 December 20X4?