Reference no: EM133106691
Question 1 - An asset was purchased for £200,000 on 1 January 20X5 and was depreciated using straight-line method (five-year life, no residual value). The annual review of asset lives is undertaken and for this particular asset, the remaining useful life as at 1 January 20X7 is eight years. The financial statements for the year ended 31 December 20X7 are being prepared. What is the depreciation charge for the year ended 31 December 20X7?
a) £30,000
b) £15,000
c) £40,000
d) £25,000
Question 2 - The carrying amount of a CGU is £787,500. This consists of goodwill £112,500, development costs £225,000 and property, plant and equipment £450,000. The CGU has a recoverable amount of £495,000. What is the carrying amount of the property, plant and equipment after the impairment loss has been allocated?
a) £550,000
b) £300,000
c) £330,000
d) £165,000
Question 3 - Arizona company estimates that an asset is expected to generate the following cash flows over its useful life of three years:
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Inflows £000
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Outflows £000
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Year 1
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80
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10
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Year 2
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120
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15
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Year 3
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95
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10
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All cash flows will occur at the end of the year concerned. At the end of the three-year period, the asset is expected to be sold for £30,000. Assuming a discount rate of 12% and working to the nearest £000, what is the asset's value in use.
a) £228
b) £250
c) £261
d) £350
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