IFRS AND US GAAP (IAS 38)
Madison Company acquired a depreciable asset at the beginning of Year 1 at a cost of £12 million. At December 31, Year 1, Madison gathered the following information related to this asset:
Carrying amount (net of accumulated depreciation) £10 million
Fair value of the asset (net selling price) £7.5 million Sum of future cash flows from use of the asset £10 million
Present value of future cash flows from use of the asset £8 million
Remaining useful life of the asset 5 years
Determine the impact on Year 2 and Year 3 income from the depreciation and possible impairment of this equipment under (1) IFRS and (2) U.S. GAAP.