On 1st July 2009 MKU acquired a specialized generator at a cost of ksh 8 million. The depreciation policy of the university is relation to generator is 20% per year on reducing balance method. As a result of expansion the generator could not serve the university appropriately hence allocated to the library alone. Because of this an impairment review was conducted on 31st Dec 2011 and realized that: 

i) The generator can be disposed at a selling price of ksh 4 M excluding a selling commission of ksh 0.5 M 

ii) The assume generator could be used to generate cash flows of ksh 0.5 M per year for a period of 4 years 

The approximated discount rate is 105 per year

Answer rating: 100% (QA)

Answer Discount Rate is 10 Per year Specialized Genarator Aquired at Cost 8 Million on 1st july 2009 ... View the full answer