On January 1, 20Y1, Martin Manufacturing paid cash for a new piece of manufacturing equipment. The machine cost $40,000 and had an estimated useful life of 5 years with a $5,000 salvage value. Martin uses the double-declining balance method of depreciation and the direct method of presenting operating cash flows.

During 20Y2, brand new technology was developed in Martins industry. If Martin does not adjust, it will lose sales, as the new technology enables its competitors to produce a higher quality product using less time and materials. This development triggered an impairment analysis of Martins existing machinery at the end of the year. 20Y2 depreciation had already been recorded by the time of the analysis. The manufacturing equipment purchased in 20Y1 now has an expected future cash flow of $12,000 and a fair market value of $2,000.

Show how the above transactions would impact 20Y120Y2 cash flow, earnings, and balance sheet elements for Martin Manufacturing

PART B: Financial Statement Impacts On January 1, 20Y1, Martin Manufacturing paid $40,000 cash for a new piece of manufacturing equipment. The machine had a 5-year estimated useful life with a $5,000 salvage value. Martin uses double-declining balance depreciation. During 20Y2, brand new technology was developed in Martin's industry. This development triggered an impairment analysis of Martin's existing machinery at the end of the year. 20Y2 depreciation had already been recorded by the time of the analysis. As of 12/31/20Y2, the manufacturing equipment purchased in 20Y1 had an expected future cash flow of $12,000 and a fair market value of $2.000. Using the following template, show how the above transactions impacted Martin's Statement of Cash Flows, Income Statement, and Balance Sheet for 20 Y1 and 20Y2. For the Balance Sheet, indicate cumulative changes Hok X 2/5 - 16000 buk 16k) -6K 24KX / 240 20Y1 20Y2 STATEMENT OF CASH FLOWS Cash flow from investing (40,000) Net Cash Flows (40,000) 3900 INCOME STATEMENT 20Y1 2012 Pep Exp Net Income YleOoo (16000) 22000 (22000 BALANCE SHEET (CUMULATIVE CHANGES) 20Y2 = uoooo ASSETS: 20Y1 Dau0.00 Equipment (Accumulated Depu (10000) ... Quo Change in Assets LIABILITIES + EQUITY: Retamed Earnings -1600 (38000) Change in Liabilities + Equity