General Optic Corporation operates a manufacturing plant in Arizona. Due to a significant decline in demand for the product manufactured at the Arizona site, an impairment test is deemed appropriate. Management has acquired the following information for the assets at the plant: Cost - $ 32,500,000Accumulated depreciation -14,200,000General’s estimate of the total cash flows to be generated by selling the products manufactured at its Arizona plant, not discounted to present value- 15,000,000 The fair value of the Arizona plant is estimated to be $11,000,000.Required:1. Determine the amount of impairment loss, if any.2. If a loss is indicated, prepare the entry to record the loss.3. Repeat requirement 1 assuming that the estimated undiscounted sum of future cash flows is $12,000,000 instead of $15,000,000. 4. Repeat requirement 1 assuming that the estimated undiscounted sum of future cash flows is $19,000,000 instead of $15,000,000
General Optic Corporation operates a manufacturing plant in Arizona. Due to a significant decline in demand for the product manufactured at the Arizona site, an impairment test is deemed appropriate. Management has acquired the following information for the assets at the plant:
Cost - $ 32,500,000
Accumulated
General’s estimate of the total
The fair value of the Arizona plant is estimated to be $11,000,000.
Required:
1. Determine the amount of impairment loss, if any.
2. If a loss is indicated, prepare the entry to record the loss.
3. Repeat requirement 1 assuming that the estimated undiscounted sum of future cash flows is $12,000,000 instead of $15,000,000.
4. Repeat requirement 1 assuming that the estimated undiscounted sum of future cash flows is $19,000,000 instead of $15,000,000
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