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.