Tom's Knick-Knacks is assessing its knick-knack machine, using straight-line depreciation, for annual impairment at 12/31/2020. As part of their assessment, Tom observed the following:

Original cost of the machine (10 year useful life)

$100,000

Accumulated depreciation of the machine (for 3 years)

30,000

Estimated undiscounted cash flows from the machine

65,000

Estimated fair value of the machine (if sold)

58,000

What amount of impairment loss, if any, would this company be required to record for its knick-knack machine at 12/31/2020 under U.S. GAAP using the two-step approach?

Selected Answer:E.None of the answers are correct.

Answers:A.$65,000

B.$70,000

C.$10,000

D.$58,000

E.None of the answers are correct.