Nyhiraba Limited purchased an asset on 1st January 2015 for an amount of R5 million. The asset has an economic useful life of 10 years for which the company uses to generate operational income. On 1st July 2018, the asset’s fair value was R3.8 million, and the cost to sell was estimated at R800,000. The asset’s value in use on that date was valued at R2.95 million. Determine whether the asset is impaired or not under IAS 36. Justify your answer with calculations and an explanation.
Nyhiraba Limited purchased an asset on 1st January 2015 for an amount of R5 million. The asset has an economic useful life of 10 years for which the company uses to generate operational income. On 1st July 2018, the asset’s fair value was R3.8 million, and the cost to sell was estimated at R800,000. The asset’s value in use on that date was valued at R2.95 million. Determine whether the asset is impaired or not under IAS 36. Justify your answer with calculations and an explanation.
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter7: Operating Assets
Section: Chapter Questions
Problem 11MCQ
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Nyhiraba Limited purchased an asset on 1st January 2015 for an amount of R5 million. The asset
has an economic useful life of 10 years for which the company uses to generate operational income.
On 1st July 2018, the asset’s fair value was R3.8 million, and the cost to sell was estimated at R800,000.
The asset’s value in use on that date was valued at R2.95 million. Determine whether the asset is
impaired or not under IAS 36. Justify your answer with calculations and an explanation.
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