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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
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 Accumulated depreciation General's estimate of the total cash flows to be generated by selling the products $34,500,000 14,400,000 15,400, 000 manufactured at its Arizona plant, not discounted to present value The fair value of the Arizona plant is estimated to be $12,000,000. Required: 1. & 2. Determine the amount of impairment loss. If a loss is indicated, where would it appear in General Optic's multiple-step income statement? 3. If a loss is indicated, prepare the entry to record the loss. 4.&5. Determine the amount of impairment loss assuming that the estimated undiscounted sum of future cash flows is $13,000,000 instead of $15,400,000 and $20,500,000 instead of $15,400,000
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