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The information that follows relates to equipment owned by Gaurav Limited at December 31, 2020:...

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Accounting

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The information that follows relates to equipment owned by Gaurav Limited at December 31, 2020: Cost Accumulated depreciation to date Expected future net cash flows (undiscounted) Expected future net cash flows (discounted, value in use) Fair value Costs to sell costs of disposal) $10,000,000 2,000,000 7,000,000 6,350,000 6,200,000 50,000 Assume that Gaurav will continue to use this asset in the future. As at December 31, 2020, the equipment has a remaining useful life of four years. Gaurav uses the straight-line method of depreciation (c) Referring to the qualitative characteristics identified in the conceptual framework for financial reporting, discuss the differences between the cost recovery impairment model and the rational entity impairment model, which method is preferred? BITTI EEE = 1 O Word(s)

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