Adam's Bikes produces specialized bicycle frames. The production process uses two machines, which together form a cash generating unit (CGU). The following information is relevant to the evaluation of impairment for these machines.
Required:
a. Assume that the welding machine has a fair value less costs to sell of $420,000. Determine the amount of impairment that should be recorded for the cash generating unit and for each of the two machines.
b. Assume that the welding machine has a fair value less costs to sell of $455,000. Determine the amount of impairment that should be recorded for the cash generating unit and for each of the two machines.
Definitions:
Falling Object
An object that is under the sole influence of gravity, typically described in physics with equations of motion.
Picture
A visual representation of an object, scene, or person produced on a surface.
Dimensions
Measurements that define the size or shape of an object, often used in geometry to describe figures in two or three-dimensional space.
Square Lot
In geometry, a square-shaped plot of land.
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