Adam's Bikes Produces Specialized Bicycle Frames

Essay

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.