Required: explain what For each situation, explain whether an impairment test is necessary, I information you need and why you need it. Solution A10-20 Asset Impairment: c. is a software development company. It has several products on the market, including the wide ay Mark animation software. The cash flows from PlayMark are clearly distinguishable within Softs Softsweat Inc. is a software d weat. y has recorded development costs of $2.8 million relating to PlayMark, which is being amortized ona t the end of 20X5, the carrying value was $1,960,000. Softsweat maintains a used Pl straight-line basis over seven years. A separate account for accumulated amortization on PlayMark. In 20X5, a large U.S. improvement over PlayMark. H Macrosoftie software to make the new product run efficiently. In addition, the high price by some users. company, Macrosoftie, released a competing product that has been hailed as a substantial owever, the competing product requires installation of a great deal of additional may delay its acceptance Because of the new competition, Softsweat management decided that an impairment test should be performed. In January 20x6, as the 20X5 financial statements were being prepared, the company hired a professional business valuator. The valuator's appraisal was that the fair value of PlayMark at the end of 20x5 was $1,000,000. Required: I. Prepare the necessary adjusting journal entry to record the results of the impairment test. 2. Suppose that in 20X6, the Macrosoftie product was found to be unreliable and that the sales of PlayMark returned to almost their 20X4 level. The fair value of PlayMark therefore was $1,600,000 at the end of 20X6. a. What would the carrying value of the assets have been if the impairment had not been recorded