USE THE FOLLOWING INFORMATION FOR THE NEXT (3) QUESTIONS:

Sun Devil purchased equipment on January 1, 2017 for $800,000, estimating a seven year life and $65,000 salvage. At the time, Bryan was using the straight-line method to depreciate this class of asset. In 2019, Sun Devil changed to the sum-of-years-digits method for this equipment.

a. Determine the book value of this equipment at December 31, 2019: $______________

b. Instead, assume Sun Devil uses the straight-line method and has recorded Accumulated Depreciation of $315,000 as of December 31, 2019. Due to competitive pressures, Sun Devil feels it is necessary to test the asset for impairment. Management determines the expected future cash inflows to be $108,000 per year and operating costs are estimated to be $10,000 per year for the next five years. Sun Devil intends to continue using the equipment and evaluates PP&E using a discount rate of 10%. Sun Devil also estimates that present value equals fair value, and disposal costs are estimated to be $10,000. (PV of $1, 10%, 5n is .62; and PVOA, 10%, 5n is 3.79).

If Sun Devil follows U.S. GAAP, determine the impairment loss. (Enter your answer as a positive number. Example, if you determine the impairment loss is $20,000, enter 20000. If you determine no impairment is indicated, enter your answer as 0 (i.e. zero) $______________

c. Using the same information presented in (b) above, but assuming Sun Devil follows IFRS reporting standards, once again test the asset for impairment. Based on your assessment, determine the impairment loss (if any): $ ____________