Six years ago Moline Industries acquired a new machine to use in its primary manufacturing operations. The machine cost $47 million and the company expected the machine to have a ten-year useful life with a zero salvage value. The company uses straight-line depreciation for the asset. However, because of changes within the industry, Moline reevaluated the machine at the end of Year 6 and estimated that the machine is capable of generating undiscounted future cash flows of $12 million. Based on the quoted market prices of similar assets, Moline estimates the fair value of the machine at $10.5 million.

Required:

a. What is the machines book value at the end of Year 6?

b. Should Moline recognize an impairment of the asset? Why or why not? If yes, what amount?

c. At the end of Year 6, what amount should the machine be listed at on Molines balance sheet? Is the accounting treatment any different if reported under the IFRS?