Innovative Incorporated has a piece of equipment with a carrying amount of $ 175,000. Technology has changed,

Question:

Innovative Incorporated has a piece of equipment with a carrying amount of $ 175,000. Technology has changed, indicating that the machine may be impaired. A new machine with updated technology could be purchased for $ 350,000. A used machine of similar vintage is listed on Kijiji for $ 160,000. The estimated from continuing to use the asset are $ 148,000. The un from the use of the asset are $ 180,000. The estimated value if the company sold the asset less commission costs is $ 155,000.

Required:
1. What value would be used to compare with the carrying amount to determine if there is impairment?
2. What is the amount of impairment?

Discounted Cash Flows
What is Discounted Cash Flows? Discounted Cash Flows is a valuation technique used by investors and financial experts for the purpose of interpreting the performance of an underlying assets or investment. It uses a discount rate that is most...