00:04
To calculate the impairment loss to be reported at december one year six.
00:10
To calculate the impairment loss to be reported at december one year six.
00:40
So we need to compare the carrying amount of the assets with their recoverable amount.
00:44
The recoverable amount is the higher of the fair value and the value in use.
00:50
So the given information, we have initial cost of assets, dollar, four lakh, initial cost, dollar, four lakh, useful life is five years, some of the year digits depreciation method, no salvage value, net future cash inflows, net future cash inflows, dollar one lakh, undiscounted, dollar one lakh, that is undiscounted, and the fair value of assets at the end of the year six, fair value of assets at the end of the year six, that is dollar 80 ,000.
01:59
So to calculate the carrying amount at the end of the year six, we need to determine the accumulated depreciation.
02:05
Since it's a sum of year digits method with a useful life of five years, we can use formula accumulated depreciation equals to remaining useful life divided by sum of year digits, sum of year digits into depreciable base, into depreciable base.
02:52
So sum of year digits equals to five plus four plus three plus three plus two plus one, which is equals to 15.
03:16
So depreciable base equals to initial cost minus the depreciable base, depreciable base equals to initial cost minus salvage value.
03:52
So depreciable base equals to four lakh minus dollar zero, four lakh minus dollar zero, which is equals to dollar four lakh...