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What is the amount of the impairment write-down

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Tennis Ltd is testing a signi?cant item of equipment for impairment in view of changes in the game. TI equipment is recognised in the statement of ?nancial position at cost of $4 million less aocumulatt depreciation of $3 million. Additional information relating to Tennis Ltd and the equipment are provided 1 follows:

  • The equipment will sell for $2 million under normal market conditions;
  • Future cash flows of $1 million are expected to be derived from Tennis Ltd's continued use of it equipment;
  • Present value of future cash ?ows of $600,000 are expected to be earned from the equipment; and Sellil the equipment costs $50,000.

Required

Question 1 : In accordance with IAS 36 Impairment of Assets, what is the recoverable amount of the equipment? What is the amount of the impairment write-down, if applicable?

Reference no: EM132513951

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