Question
Equipment cost $500,000. Residual value was initially $20,000. Useful life: 10 years. After four years, the machine has a carrying amount of $308,000. An impairment test determines recoverable amount of $230,000. The machine has five years remaining after the impairment test, and its residual value remains $20,000. It is sold three years later for $160,000.
Required: Calculate the impairment, depreciation after impairment, carrying amount at disposal, and the gain/loss.
Statements in this challenge
- ImpairmentNumeric Answer
- Depreciation After ImpairmentNumeric Answer
- Carrying Amount at DisposalNumeric Answer
- Gain on DisposalNumeric Answer
Scoring
- 40% Account naming / line matching
- 40% Amount correctness
- 20% Structure / section placement
How to approach this
IAS 1 — Presentation of Financial Statements
A composite challenge links several statements built from one set of data, so figures flow between them: profit reaches retained earnings, and the closing balances feed the position statement. Complete them in the order the statements depend on each other rather than the order of the tabs.
Common mistakes
- Preparing each statement independently, so the linking figures disagree.
- Carrying a figure forward before finishing the adjustments that change it.
- Reworking a linked figure in one statement without updating it in the others.
Further readingIAS 1: what goes where in a full set of statements