Question 3 ABC Mining Ltd in 2010 started its mining business in South Australia. The company mines silver and exports to India. On 1 July 2018, ABC Mining acquired and installed an item of equipment for use in its mining business. ABC Mining has provided you with the following information relating to its acquisition of the equipment: Cost at acquisition date: 1 July 2018 Estimated useful life: Expected residual value: Depreciation method: straight-line basis over its useful life Carrying amount: 30 June 2013 $720,000 10 years $120,000 Straight-line $600,000 At the end of the 2020 reporting period the annual review of all equipment found that this particular item of equipment had incurred significant damage because of harsh tropical weather condition. ABC Mining used an external firm of Actuaries to provide the fair values of its equipment's. The actuaries as a result of the damage, estimated the fair value less costs of disposal of the equipment at the end of the reporting period as follows: Annual review end of the 2020, fair value less costs of disposal Expected annual net cash flows next 8 years Expected residual value $360,000 $63,000 Unchanged The management of ABC Mining and the actuaries uses a discount rate of 8 per cent for calculations of this kind. REQUIRED: 1. Determine whether ABC Mining has incurred an impairment loss in relation to the asset. If so, determine the amount of the impairment loss, and provide the journal entry necessary to recognise any impairment in the equipment. Please show all your calculations. (7 marks)