Bon -Ton recently declared bankruptcy and sold off most of their assets. This would probably indicate enough of a change in use to trigger the testing of the remaining assets for impairment. Lets say that Bon-Ton has a distribution center located in Missouri that had an original cost of $62 million. Since it was built, Bon-Ton has reported $36 million in depreciation on the center. Remember, the test for impairment is one step and the calculation of the impairment is another.

Under Scenario 1, Bon-Ton can lease the center to another distributor for $200,000 per month for 10 years. What would be your steps to test the center for impairment and then calculate the impairment if needed? You do not have enough information to actually calculate the impairment - just describe how you would.

Under Scenario 2 (completely independent of scenario 1), Bon-Ton estimates that the center can be remodeled into an indoor sports facility. The remodeling would cost $10 million and the resulting building would sell for $25 million. What would your steps to test for impairment of the center and what would be the amount of impairment if needed?