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Krisps Chips Ltd owns a snack food vending machine, and is undertaking the impairment test....

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Accounting

Krisps Chips Ltd owns a snack food vending machine, and is undertaking the impairment test. Krisp Chips Ltd needs to determine the asset’s Value in Use. The following information is available:

• The asset is expected to generate cash flows over the next 3 years, and at the end of the 3 years, it is expected to be sold for $900.

• The net cash inflows expected over the next 3 years are: $8,000, $5,000 and $2,000 at the end of each year respectively.

• The discount rate to be used is 8%.

Required:

Determine the VIU of the vending machine.

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