Fixed assets are the primary asset of New Line Manufacturing Company $($the Company$).$ As of December $2031,$ the Company is having liquidity problems. the Company's borrowing base is limited to $\backslash (60\backslash \%\backslash )$ of its net fixed assets. The CFO of the Company has been entertaining the idea of changing from US GAAP to IFRS. The bank has agreed to loan up to $\backslash (60\backslash \%\backslash )$ of the net fixed assets regardless of whether the Company uses US GAAP or IFRS for accounting purposes.

Land A

Land is carried at its historical cost of $\backslash (\backslash$$ $4\mathrm{.}0\backslash )$ million, while its fair value is $\backslash (\backslash$$ $5\mathrm{.}0\backslash )$ million.

Question $6$

Building $\backslash ($ B $\backslash )$

Building $\backslash ($ B $\backslash ),$ with a $30-$year life, was acquired $10$ years ago at a cost of $\backslash (\backslash$$ $60\mathrm{.}0\backslash )$ million. The fair value of the building is estimated to be $\backslash (\backslash$$ $40\mathrm{.}0\backslash )$ million at the end of $2031.$

Question $7$

Equipment C

On January $1,2027,$ equipment C was acquired at a cost of $\backslash (\backslash$$ $10\mathrm{.}0\backslash )$ million. It had a $10-$year service life with no estimated scrap value. At the end of $2031,$ there have been technological innovations that may have impaired this equipment, which now has an estimated fair value of $\backslash (\backslash$$ $1\mathrm{.}0\backslash )$ million. The future undiscounted cash flows from this equipment are estimated to be $\backslash (\backslash$$ $5\mathrm{.}0\backslash )$ million, while the discounted net present value of the expected cash flows is estimated to be $\backslash (\backslash$$ $3\mathrm{.}0\backslash )$ million.

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Equipment D

This equipment was acquired in $2028$ at a cost of $\backslash (\backslash$$ $10\mathrm{.}0\backslash )$ million. It had a six$-$year service life with a $\backslash (\backslash$$ $1\mathrm{.}0\backslash )$ million estimated scrap value. At the end of $2009,$ the equipment was believed to be impaired and it was written down by $\backslash (\backslash$$ $2\mathrm{.}0\backslash )$ million. At the end of $2031,$ it no longer appears any impairment reserve is necessary.

Question $9$

Equipment E

This piece of equipment was acquired in $2031$ at a cost of $\backslash (\backslash$$ $12\mathrm{.}0\backslash )$ million. The service life is expected to be eight years and no net salvage value is expected. A major component of this equipment is the motor, which costs $\backslash (\backslash$$ $4\mathrm{.}0\backslash )$ million and must be replaced every four years.

Question $10$

Equipment F

Construction of this equipment started on January $1,2031$ and was completed on January $1,2032.$ Old Line borrowed $\backslash (\backslash$$ $20\mathrm{.}0\backslash )$ million denominated in US dollars on January $1,2031$ to finance construction of this equipment. The interest rate on this loan was $\backslash (10\backslash \%\backslash ).$ Old Line made payments to the construction company of $\backslash (\backslash$$ $10\mathrm{.}0\backslash )$ million on January $1,2031$ and $\backslash (\backslash$$ $10\mathrm{.}0\backslash )$ million on July $1,2031.$ Excess funds during this period were invested at a return of $\backslash (6\backslash \%\backslash ).$ Old Line also incurred a $\backslash (\backslash$$ $1\mathrm{.}0\backslash )$ million exchange rate loss on other borrowings during $2031.$ Question $11$

Based on your analysis, determine how to best maximize the amount of net fixed assets.

Question $12$

Prepare a formal report addressed to the CFO of the Company formally articulating your computation, analysis and recommendations to the Company.