Question 6 (12 points)

Suppose a corporation only has 1 fixed asset. Useful life is expected to be 6 years. Carrying value on this corporation's Balance Sheet is $289,000. Here are the projected future cash flows.

Year 1$55,000

Year 2$51,000

Year 3$47,200

Year 4$43,100

Year 5$33,600

Year 6 $25,800

Year 7 & beyond:-0-

A.Demonstrate why this fixed asset is impaired. Show all work.

B.Assuming a discount rate of 4.85%, calculate the new value after impairment that should appear on the Balance Sheet. Show all work.

C.Calculate the impairment expense amount that should appear on the Income Statement. Show all work.