Solution-Compute the net recoverable amount of the machinery

Compute the net recoverable amount of the machinery

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Reference no: EM132761603

Question - Frankenstein Company has a group of machines having an aggregate carrying amount at December 31, 2016 of P1,230,000.

Upon analysis, the following information about the future expected cash inflows and outflows based on the diminishing productivity expected of the machinery as it ages and the increasing cost that will be incurred to generate output from the machines:

Year	Revenues (inflows)	Costs, excluding depreciation (outflows)
2017	750,000	280,000
2018	800,000	420,000
2019	650,000	550,000
2020	200,000	160,000

The selling price of the machinery was determined by reference to used machinery quotations from a well-known dealer. After deducting the estimated disposal costs, the net selling price is calculated as P845,000.

The pre-tax discount rate and post-tax discount rate reflecting the specific risks of the machinery are 7% and 2% respectively. Use two decimal points.

1. Compute the net recoverable amount of the machinery?

2. Compute the amount of impairment loss?

Reference no: EM132761603

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Compute the net recoverable amount of the machinery

Reference no: EM132761603

Reference no: EM132761603

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