ABC Mining Ltd in 2010 started its mining business in South Australia. The company mines silver and exports it to India.

On 1 July 2018, ABC Mining acquired and installed an item of equipment for use in its mining business. ABC Mining has provided you with the following information relating to its acquisition of the equipment:

Cost at acquisition date: 1 July 2018	$720,000
Estimated useful life:	10 years
Expected residual value :	$120,000
Depreciation method: straight-line basis over its useful life	Straight-line
Carrying amount: 30 June 2020	$600,000

At the end of the 2020 reporting period, the annual review of all equipment found that this particular item of equipment had incurred significant damage because of harsh tropical weather condition. ABC Mining used an external firm of Actuaries to provide the fair values of its equipments. The actuaries as a result of the damage estimated the fair value less costs of disposal of the equipment at the end of the reporting period as follows:

Annual review end of 2020, fair value less costs of disposal	$360,000
Expected annual net cash flows next 8 years	$63,000
Expected residual value	Unchanged

The management of ABC Mining and the actuaries uses a discount rate of 8 per cent for calculations of this kind.

REQUIRED:

Determine whether ABC Mining has incurred an impairment loss in relation to the asset. If so, determine the amount of the impairment loss, and provide the journal entry necessary to recognise any impairment in the equipment. Please show all your calculations

Recoverable amount = the higher of FV less cost VS value in use