Question 1:Michael Company acquired a depreciable asset at the beginning of 2020 at a cost of $30 million. On Decembe

Cornerstones of Financial Accounting
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ISBN:9781337690881
Author:Jay Rich, Jeff Jones
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Chapter7: Operating Assets
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Question 1:Michael Company acquired a depreciable asset at the beginning of 2020 at a cost of $30 million. On December 31, 2020, Madison gathered the following information related to this asset:

Michael Company at December 31, 2020, the following information related to equipment:

The fair value of the asset ( net selling price )…………………………………..$26.5 million

Sum of future cash flows use of the asset………………………………….$25 million

Present value of future cash flows from the use of the asset……………. 26 million

Remaining useful life of the asset..............................9 years

Requirements :

Under IFRS

  1. The determination and measurement of impairment loss.
  2. Following journal entry would be made to reflect the impairment of this equipment in Dec 31, 2020. 
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