On December 31, 2000, Franklin Company has an asset that is impaired. The machine cost $100,000 on January |, 1997, and has accumulated depreciation of $40,000 at the end of 2000.The company estimates that the machine will produce net cash inflows of

$13,000 each year for the next four years, and the company uses a discount rate of |2%.

Required: (1) Compute the impairment loss on the machine.

(2) Using T-accounts, prepare the entry to record the impairment loss.

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