method and a zero residual value. Late in Year 6, because of technological changes in the industry and reduced selling prices for its products, Borstad believes that its equipment may be impaired and will have a remaining useful life of 8 years. Borstad estimates that the equipment will produce cash inflows of $430,000 and will incur cash outflows of $322,000 each year for the next 8 years. It is not able to determine the fair valu the equipment based on a current selling price. Borstad's discount rate is 12%. Required: 1. Prepare schedules to determine whether, at the end of Year 6, the equipment is impaired and, if so, the impairment loss to be recognized. 2. Prepare the journal entry to record the impairment. 3. Next Level How would your answer to Requirement 1 change if the discount rate was 16% and the cash flows were expected to continue for 6 years? 4. Next Level How would your answer change if management planned to implement efficiencies that would save $15,000 each year? Chart of Accounts The book value is than the undiscounted expected net cash flows, so Borstad recognize an impairment loss at Decembe 31 , Year 6. Complete the Impairment Analysis to determine the amount of the loss (if any) under US GAAP at December 31 , Year 6. Question not attempted. How does grading work? 3. How would your answer to Requirement 1 change if the discount rate was 16% and the cash flows were expected to continue for 6 years? Borstad Company would recognize a loss of continue for 6 years. X if the discount rate was 16% and the cash flows were expected to 4. How would your answer change if management planned to implement efficiencies that would save $15,000 each year? Step 1: Complete the Recoverability Test below. Question not attempted. method and a zero residual value. Late in Year 6, because of technological changes in the industry and reduced selling prices for its products, Borstad believes that its equipment may be impaired and will have a remaining useful life of 8 years. Borstad estimates that the equipment will produce cash inflows of $430,000 and will incur cash outflows of $322,000 each year for the next 8 years. It is not able to determine the fair valu the equipment based on a current selling price. Borstad's discount rate is 12%. Required: 1. Prepare schedules to determine whether, at the end of Year 6, the equipment is impaired and, if so, the impairment loss to be recognized. 2. Prepare the journal entry to record the impairment. 3. Next Level How would your answer to Requirement 1 change if the discount rate was 16% and the cash flows were expected to continue for 6 years? 4. Next Level How would your answer change if management planned to implement efficiencies that would save $15,000 each year? Chart of Accounts The book value is than the undiscounted expected net cash flows, so Borstad recognize an impairment loss at Decembe 31 , Year 6. Complete the Impairment Analysis to determine the amount of the loss (if any) under US GAAP at December 31 , Year 6. Question not attempted. How does grading work? 3. How would your answer to Requirement 1 change if the discount rate was 16% and the cash flows were expected to continue for 6 years? Borstad Company would recognize a loss of continue for 6 years. X if the discount rate was 16% and the cash flows were expected to 4. How would your answer change if management planned to implement efficiencies that would save $15,000 each year? Step 1: Complete the Recoverability Test below. Question not attempted