Question
Big Bad Corp uses three different machines (A, B, and C) to manufacture products. These machines are considered to be a cash generating unit (CGU).
Big Bad Corp uses three different machines (A, B, and C) to manufacture products. These machines are considered to be a cash generating unit (CGU). Due to climate change and changes in consumer preferences, demand has declined in recent years. The following information is relevant to the evaluation of impairment.
| MACHINES--> | A | B | C | Total |
| Net carrying value | $800,000 | $1,430,000 | $1,170,000 | $3,400,000 |
| Fair value less costs to sell | 1,000,000 | 1,330,000 | 670,000 | 3,000,000 |
| Value in use | NA | NA | NA | 2,700,000 |
Required:
Determine the amount of impairment loss, if any, that should be recorded for each of the three machines. Do not use dollar signs 0r +/- in your answer. Round your final answer to the nearest dollar. Do not round intermediary answers.
Machine A - $
Machine B - $
Machine C - $
Step by Step Solution
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There are 3 Steps involved in it
Step: 1
To determine the amount of impairment loss for each machine we compare the carrying value of eac...
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Advanced Accounting
Authors: Gail Fayerman
1st Canadian Edition
9781118774113, 1118774116, 111803791X, 978-1118037911
