Answer in the form of an memo.

Answer Case Study Question 8.1 on page 233 of the Collins text. Prepare your answers in the form of an Accounting Issues Memo. CASE STUDY QUESTIONS Spoiled Cheese? Recall Frankie's Homemade Cheese Shop from the Chapter 7 cases. Assume now that Frankie's 8.1 has finished construction of the new cheese superstore along Route 5 and capitalized $1.9 million related to the proj- ect as of the store's opening on 1/1/20X1. As of 12/31/X1, the current carrying value of the shop is $1.805 million (assuming a 20-year life for the store and straight-line depreciation). As of 12/31/X1, Frankie's notices that a few negative factors are at play and asks you whether it is required to test the superstore for impairment: 1. A key stock market index (the Dow) has slid 1,500 points, or 6%, since the store was opened. 2. Monthly sales have slid by 10% since the store was opened, partially due to a construction project on Route 5 that has reduced traffic flow to the area. 3. As a result of the slide in monthly sales, the store operated at a deficit in October, November, and December of 20X1. Assume the fair value of the store at 12/31/X1 is $1.7 million. As of 12/31/X1, Frankie's estimates the store will produce net cash inflows of $50,000 in year 2, $100,000 each in years 3-5, $150,000 each in years 6-10, $175,000 each in years 11-15, and $200,000 each in years 16-20. Note that Frankie's incremental borrowing rate is 6%. Is the store required to be tested for impairment? Should Frankie's impair the current carrying value of the store at 12/31/X1