Hotel Consolidators purchases blocks of hotel rooms at a discount and resells them on the Internet. In 2003, the company developed a proprietary system to help attract Internet users to its website, and the company capitalized $25 million for the development cost. This system cost includes all the software and hardware, as well the design effort that went into the system. The company depends almost entirely on this system for its revenues.
It is now 2009. Worldwide travel has declined significantly due to the deep recession that began in 2008.
Required:
Evaluate whether Hotel Consolidators needs to test the proprietary Internet system for impairment.