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A3- 1. A plant was purchased on 1 January 20X3 for $150,000. The equipment is depreciated as 25% per annum using the reducing balance method.The equipment is still available and its list price at 31 December 20X4 is $187,000, although the current model is 10% more efficient than the model the entity purchased in 20X3. It is estimated that the equipment could be sold second hand for $55,000 although the company would have to spend about $2,000 in advertising costs to do so. The asset is expected to generate net cash inflows of $30,000 for the next 5 years after which time it will be scrapped. The company's cost of borrowing is 6%. Discount factors at 6% at the end of year: 1 0.943 2 0.890 3 0.840 4 0.792 5 0.747.
Required Calculate the depreciation charge for the equipment for the year ending 31 December 20X4 (based on year end values) and its statement of financial position value at that date using: (a) historical cost (b) fair value (c) current cost (d) net realisable value (e) net present value.
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