Exercise 11-30 (Algo) Impairment; property, plant, and equipment [LO11-8]

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 $ 38.5 million; Accumulated depreciation $ 14.8 million. Generals estimate of the total cash flows to be generated by selling the products manufactured at its Arizona plant, not discounted to present value $ 16.2 million The fair value of the Arizona plant is estimated to be $14.0 million.

Required:

1. Determine the amount of impairment loss.

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

3. & 4. Determine the amount of impairment loss assuming that the estimated undiscounted sum of future cash flows is (3) $15.0 million instead of $16.2 million and (4) $24.35 million instead of $16.2 million.