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Oriole-Line Inc. (OLI) is a manufacturer that produces parts for residential telephones. Recent indications are that the market for this product is likely to continue
Oriole-Line Inc. (OLI) is a manufacturer that produces parts for residential telephones. Recent indications are that the market for this product is likely to continue to decline significantly and OLI is testing equipment used in the production process for impairment based on a cash-generating unit of tools and dies, specialized equipment, and general equipment with the following carrying amounts (in thousands): The tools and dies and specialized equipment cannot be used elsewhere and have no resale value, while the general equipment could be sold today for $13,600. OLI plans to continue producing the parts for two more years to fill a commitment to its customer. Net future cash flows from the next two years' production of parts and the disposal of equipment are estimated to be $30,850, with present value of the cash flows of $25,750. If an impairment loss is indicated, how would it be allocated to assets in the CGU? (Enter amounts in thousands. Do not round intermediate calculations. Round final answers to 0 decimal places, e.g. 5,125.)
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