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Calculate impairment loss and reversal of impairment loss

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Reference no: EM132538110

Question - On 1 January 2014, Bawan Bhd purchased a machine for RM500,000. The machine had estimated useful life of 5 years and a salvaged value of RM60,000. The machine generated cash flows independent of the other assets in the company. In 2016, it was determined that the machine was impaired. On 31 December 2016, its fair value less cost to sell was RM144,000 and its projected net cash flows were RM70,000 and RM50,000 in 2017 and 2018 respectively. The company's incremental borrowing rate was 10%. In 2017, the machine's recoverable amount increased. On 31 December 2017, the fair value of the machine was RM142,000, while the transportation cost was RM2,000. The value in use was RM160,000.

Required - Calculate the impairment loss and reversal of impairment loss (if any) for the machine for the years ended 31 December 2016 and 2017.

Reference no: EM132538110

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