Answer the following questions based on this information set;

XYZ, Inc. has a piece of machinery with a carrying value of $1,500,000

It believes the machinery is now obsolete and that it will only generate positive cash flows for the next 5 years at $250,000.

It believes a 4% discount rate would be best to determine the present value of these cash flows.

a) Should it impair the asset and why (just provide a yes or no answer and your justification).

b) Regardless of you answer in a) assume that it did determine that it should impair the asset, what would be the amount of the loss and what would be the journal entry to record the loss? Explain your calculation of the loss amount.

c) Shortly after XYZ recorded this entry, if discovered that the machinery had some features that were still more useful than they thought and that the estimated future cash flows from the machine would more likely be $350,000 per year for the next 5 years. Record the journal entry they would use for this event.