1. ABCL owns a piece of manufacturing equipment that has outdated technology. You suspect that the machinery is impaired and would like to calculate the impairment loss, if any. The equipment will generate the following cash flows over the next three years (at the end of each year): a. Year 1 = $10,000 b. Year 2= $10,000 c. Year 3 = $5,000 Assume that an appropriate discount rate is 5%. You plan to estimate the equipments value in use as a first step. The carrying value before any adjustments is $30,000. Assume the fair value less costs of disposal is equal to the value in use.

a. For the manufacturing equipment, calculate the value in use. Should ABCL recognize an impairment loss? Why or Why not? Calculate the impairment loss (if any).