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At what value should the equipment be recorded

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A petroleum company is required by law to remove and dismantle all its equipment once a project is over. The company has updated its financial statements with these costs and depreciates them over useful life of equipment.

Details of the equipment are as follows:

Carrying amount is $3m.
An offer of $2.8m for the equipment with buyer assuming the removal/ dismantling as needed.
The present value of the estimated cash flows from the platform's continued use is $3.3m.
Cost of removal and dismantling is $0.6m.

Required:

Problem 1: At what value should the equipment be recorded in the financial statements under IAS 36? Show all workings and concepts clearly.

Reference no: EM132759578

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