General Optic Corporation operates a manufacturing plant in Arizona. Due to a significant decline in demand for the product manufactured at the Arizona site, an impairment test is deemed appropriate. Management has acquired the following information for the assets at the plant: 

Cost.........................................................................................................................$32,500,000 

Accumulated depreciation................................................................................14,200,000 

General’s estimate of the total cash flows to be generated by.........15,000,000 

selling the products manufactured at its Arizona plant, not discounted to present value

The fair value of the Arizona plant is estimated to be $11,000,000.

Required: 

1. Determine the amount of impairment loss, if any. 

2. If a loss is indicated, prepare the entry to record the loss. 

3. Repeat requirement 1 assuming that the estimated undiscounted sum of future cash flows is $12,000,000 instead of $15,000,000.