Read the following case and then answer questions. On 1 January 2016 a company purchased a...

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Read the following case and then answer questions. On 1 January 2016 a company purchased a machine at a cost of $3,000. Its useful life is estimated to be 10 years and then it has a residual value of $1,000. At 31 December 2018 it was estimated that the machine could be sold for $3,500. However, if the company could make a maintenance to the machine, it would be sold for $6,000. The maintenance fee was $1,500. At the same time, if the company continued to use the machine, management estimated that it would generate net cash inflows with a present (discounted) value of $6,200. New plant of the same type would cost $8,000 at 31 December 2018. Required: (1)Calculate the amount of value for this asset shown in the financial statement at the year-end 2018 (use the straight-line depreciation method). (2 marks) (2) Calculate these values of this machine at the year-end 2018: net realizable value, economic value, and net replacement cost. (6 marks) (3)Calculate the deprival value of this machine at year-end 2018. (4 marks) (4)Explain the meaning of deprival value in this case (3 marks) (5)Suppose you try to write a research paper based on this case with a stance of advocating alternatives to the historical cost method. In this case, identify which cost/value associates to the historical cost, and which ones associate to alternatives (5 marks)? Would this paper be positive accounting theory or normative accounting theory? (5 marks) Read the following case and then answer questions. On 1 January 2016 a company purchased a machine at a cost of $3,000. Its useful life is estimated to be 10 years and then it has a residual value of $1,000. At 31 December 2018 it was estimated that the machine could be sold for $3,500. However, if the company could make a maintenance to the machine, it would be sold for $6,000. The maintenance fee was $1,500. At the same time, if the company continued to use the machine, management estimated that it would generate net cash inflows with a present (discounted) value of $6,200. New plant of the same type would cost $8,000 at 31 December 2018. Required: (1)Calculate the amount of value for this asset shown in the financial statement at the year-end 2018 (use the straight-line depreciation method). (2 marks) (2) Calculate these values of this machine at the year-end 2018: net realizable value, economic value, and net replacement cost. (6 marks) (3)Calculate the deprival value of this machine at year-end 2018. (4 marks) (4)Explain the meaning of deprival value in this case (3 marks) (5)Suppose you try to write a research paper based on this case with a stance of advocating alternatives to the historical cost method. In this case, identify which cost/value associates to the historical cost, and which ones associate to alternatives (5 marks)? Would this paper be positive accounting theory or normative accounting theory? (5 marks)

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1 Calculation of the value of the asset shown in the financial statement at yearend 2018 The machine was purchased for 3000 and has an estimated useful life of 10 years with a residual value of 1000 T... View the full answer