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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
An entity has an oil platform in the sea. The entity has to decommission the platform at the end of its useful life, and a provision was set up at the commencement of production. The carrying value of the provision is $8 million. The entity has received an offer of $20 million (selling costs $1 million) for the rights to the oil platform, which reflects the fact that the owners have to decommission it at the end of its useful life. The value-in-use of the oil platform is $26 million ignoring the decommissioning costs. The current carrying value of the oil platform is $28 million.
Required
Determine whether the value of the oil platform is impaired.
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