On January 1, 2009, a company acquired a piece of equipment for shs.100,000. It was decided that the equipment would be depreciated over ten years with zero salvage value. At December 31, 2012, the equipment has significantly decreased in value due to technological innovations in the industry in which the company operates. The current carrying value of the equipment is shs.60,000 (shs.100,000 cost less shs.40,000 of accumulated depreciation). The expected future undiscounted cash flows from the use of this equipment are shs.61,000. The discounted net present value of expected cash flows from this piece of equipment is shs.51,000. Additionally, the fair value of the piece of equipment is shs. 50,000 and the selling costs are minimal. Is the equipment impaired under IAS 36? Show any required journal entries.

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Required solution is given below Yes This equipment impaired under IAS ... View the full answer