Cobalt Ridge’s crusher: carrying amount 500,000. Value in use is 380,000. A dealer would pay 400,000; costs of disposal would be 30,000. Compute fair value less costs of disposal, restate value in use, and give the recoverable amount.
Cobalt Ridge’s crusher: carrying amount 500,000. Value in use is 380,000. A dealer would pay 400,000; costs of disposal would be 30,000. Compute fair value less costs of disposal, restate value in use, and give the recoverable amount.
Answer
Fair value less costs of disposal → 370000 · Value in use → 380000 · Recoverable amount → 380000
Cells - Fair value less costs of disposal · ±0 · unit $ - Value in use · ±0 · unit $ - Recoverable amount · ±0 · unit $ FVLCD = 400,000 − 30,000 = 370,000. Value in use = 380,000 (given, the PV of expected cash flows). Recoverable amount = MAX(380,000, 370,000) = 380,000 — the higher, because a rational owner takes the better of using and selling. Excel: `=MAX(VIU, FV-costs)`.
L1 §10.3, §10.3.1; LI §8.5; IAS 36 ¶9, ¶12–14, ¶18 (verified-facts 2.5-5)