Freedman Ltd has 2 identical pieces of equipment. The first it acquired in 2011 for $6,000,000. The second was acquired at a cost of $3,000,000 in a forced sale situation in 2012. The company has been enjoying record profits over the last three years. The company is under substantial pressure from the union which represents 80% of its workforce to increase wages. The CEO has requested you as CFO to write down the value of the first piece of equipment to $3,000,000.

Would you agree to his request? Explain your answer and indicate what factors would influence your decision.

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