On January 1, 2005 TTM (Pty) Ltd. purchased a building for R2 million. Its estimated useful...

  

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On January 1, 2005 TTM (Pty) Ltd. purchased a building for R2 million. Its estimated useful life at that date was 20 years and the company uses the straight-line depreciation method. On December 31, 2009 the government embarked on a plan to construct a fly-over adjacent to the building and the related installation reduced the access to the building thereby decreasing the value of the building. The company estimated that it can sell the buildings for R1 million but it has to incur costs of R50,000. Alternatively, it if continues to use it the present value of the net cash flows the building will help in generating is R1.2 million. Determine the impairment loss on the building and the subsequent journal entry. On January 1, 2005 TTM (Pty) Ltd. purchased a building for R2 million. Its estimated useful life at that date was 20 years and the company uses the straight-line depreciation method. On December 31, 2009 the government embarked on a plan to construct a fly-over adjacent to the building and the related installation reduced the access to the building thereby decreasing the value of the building. The company estimated that it can sell the buildings for R1 million but it has to incur costs of R50,000. Alternatively, it if continues to use it the present value of the net cash flows the building will help in generating is R1.2 million. Determine the impairment loss on the building and the subsequent journal entry.

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Impairment loss on the building R20000... View the full answer