The company Pouloop owns a line of production, purchased on March, 5th, 2015, for 200 000€, depreciated according to the decline balance method over 5 years (multiplier of 1.5). There is not any salvage value. At the end of 2016, there are some indications that there may be loss of value of the line of production, which drives Pouloop to do an impairment test. The carrying amount at the end of 2016 is 105 000€. The fair value of the line of production at the end of 2016 is 75 000€. Moreover, management estimates the cash flows created by the assets over the 3 remaining years of lifetime as below:

 • 2017 : 33 000€
• 2018 : 35 000€
• 2019 : 20 000€

Considering uncertainty about the use of the machine, Pouloop considers an interest rate of 8% for the calculation of the value in use. Check whether Pouloop should recognize an impairment

Answer rating: 100% (QA)

To determine whether Pouloop should recognize an impairment loss for the production line we need to ... View the full answer