Question
Summit Infrastructure Ltd. acquires a specialized operating facility on July 1, 2025, installs it over a six-month qualifying period, and brings it into use on January 1, 2026. Costs: purchase price $4,000,000, import duty $120,000, installation $180,000, employee training $70,000 (expensed), and present value of a mandatory site restoration obligation of $400,000. On July 1, 2025, Summit borrowed $2,000,000 specifically to finance the installation, at 9% annual interest. The facility contains a structure ($2,500,000 allocated, 20-year life), production equipment ($1,200,000, 8-year life), and a major inspection component ($600,000, 4-year life), zero residuals; the remaining $490,000 of capitalized acquisition-related cost is attributable to the structure. On January 1, 2028, Summit spends $500,000 replacing a major part of the inspection component (the replaced part: cost $450,000, accumulated depreciation $225,000); the new part has a 5-year useful life, and the remaining $150,000 of the original inspection component continues over its original life. On December 31, 2029, the entire facility is revalued from a carrying amount of $3,292,000 to a fair value of $3,700,000; from that date the facility is depreciated as a whole over a remaining useful life of 10 years with zero residual value. Summit does not transfer revaluation surplus to retained earnings as the asset is used. On December 31, 2030, an impairment test finds a recoverable amount of $2,850,000 against a carrying amount immediately before impairment of $3,330,000; at that date the remaining useful life is reassessed at 6 years, with no residual value. On December 31, 2032, the facility is sold in its entirety for $3,000,000.
Required: determine the initial cost, record the decommissioning provision, determine total initial annual depreciation, the old component's carrying amount, the new component's annual depreciation, record the revaluation, determine the 2030 impairment loss, and determine the gain on final disposal.