BIRD COMPANY has a group of machines having an aggregate carrying amount at December 31, 2021 of
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Question:
- BIRD COMPANY has a group of machines having an aggregate carrying amount at December 31, 2021 of P1,234,500.
Upon analysis, the following information about the future expected cash inflows and outflows based on the diminishing productivity expected of the machinery:
| Year | 2022 | 2023 | 2024 | 2025 |
| Expected cash inflows | 850,000 | 700,000 | 580,000 | 450,000 |
| Expected cash Outflows | 360,000 | 310,000 | 280,000 | 195,000 |
The selling price of the machinery was determined by reference to used machinery quotations from a well-known dealer. After deducting the estimated disposal costs, the net selling price is calculated as P860,000
The pre-tax discount rate and post-tax discount rate r reflecting the specific risks of the machinery are 5% and 3% respectively
- The net recoverable amount of the machinery is?
- The amount of impairment loss is?
Expert Answer:
To calculate the net recoverable amount of the machinery and the amount of impairment loss we need t... View the full answer
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