Question 2: Deprival value an 1) anvary 20X1 a company bought plant costing...

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Accounting

Question 2: Deprival value
an 1) anvary 20X1 a company bought plant costing $50000. Its useful life was estimated to be ten years addithed no residual value.
At 31 December 20X3 it was estimated that the plant could be sold for $20000 but it would have to be dismantled, which would cost approximately $2000.
If the company continues to use the machine, management estimates that it will generate net cash inflows with a present (discounted) value of $25000.
New plant of the same type would cost $60000 at 31 December 20X3.
Calculate the deprival value of the asset. Explain why this amount is its value to the business.
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