Describe how ab should treat the above impairment of assets

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B, a public limited company, has decided to comply with IAS 36 Impairment of Assets. The following information is relevant to the impairment review: Certain items of machinery appeared to have suffered a permanent diminution in value. The inventory produced by the machines was being sold below its cost and this occurrence had affected the value of the productive machinery. The carrying value at historical cost of these machines is $290,000 and their net selling price is estimated at $120,000. The anticipated net cash inflow from the machines is now $100,000 per annum for the next three years. A market discount rate of 10% per annum is to be used in any present value computations.

(Note: Value in Use after computation of the present value is $ 248,600. Formula for computation of Present Value PV = Future Value / (1+i)n).

Required:

Describe how AB should treat the above impairment of assets in its financial statements.

Reference no: EM131796271

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