Reference no: EM133185145

Question - On 1 July 2018 Campion Limited acquired an item of plant for $50,000. At the date of acquisition, the plant was assessed to have a useful life of 20 years with a nil residual value. Campion uses the cost model under IAS 16 Property, Plant and Equipment to account for the plant.

As a result of a downturn in the market for the product being produced by the plant, an impairment test was performed on 30 June 2020 when the plant's carrying amount was $45,000. The plant's recoverable amount was assessed at $40,000 and an impairment loss was recognised. The remaining useful life of the plant remained unchanged.

At 30 June 2021 the market for the product being produced by the plant had improved, and the plant's recoverable amount at that time was assessed at $46,000.

What is the carrying amount of the plant as at 30 June 2021 after recording all entries necessary under IAS 36 Impairment of Assets as a result of the above information?

A. $37,500.

B. $46,000.

C. $37,778.

D. $42,500.