Using the same information from P12- 2, assume that Cupcakes- R- Us deter-mines that the likelihood of the expected future cash flows under Estimate 1 is 70% and 30% under Estimate 2.

Required
a. Compute the carrying value of Cupcakes- R- Us€™s equipment.
b. Compute the expected cash flows given the likelihood of Estimate 1 and Estimate 2. What is the present value of the expected cash flows?
c. Conduct the impairment tests for Cupcakes- R- Us using the results from part b. If required, prepare the journal entry to record any impairment loss.

Cash Flow Cash Flow Projection Projection- Estimate 2 Future Period Year 1 Year 2 Year 3 Year 4 Year 5 Total Estimate 1 $120,000 100,000 70,000 35,000 30,000 355,000 $120,000 100,000 80,000 35,000 30,000 $365,000