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.

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