Mike€™s Bikes produces specialized bicycle frames. The production process uses two machines, which together form a cash generating unit. 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 cost to sell of $160,000. 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 cost to sell of $220,000. Determine the amount of impairment that should be recorded for the cash generating unit and for each of the two machines.

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Bending Welding machine Total cash gencrating unit Net earrying value Eair value less costs to sell Value in use machine $300,000 180,000 $200,000 $500,000 See required 400,000 See required