General Optic Corporation operates a manufacturing plant inArizona. Due to a significant decline in...

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Accounting

General Optic Corporation operates a manufacturing plant inArizona. Due to a significant decline in demand for the productmanufactured at the Arizona site, an impairment test is deemedappropriate. Management has acquired the following information forthe assets at the plant:
Cost $ 43,500,000
Accumulated depreciation 15,300,000
General’s estimate of the total cash flows to be generated byselling the products
manufactured at its Arizona plant, not discounted to presentvalue 17,200,000

The fair value of the Arizona plant is estimated to be$16,500,000.

Required:
1. & 2. Determine the amount of impairmentloss. If a loss is indicated, where would it appear in GeneralOptic’s multiple-step income statement?
3. If a loss is indicated, prepare the entry torecord the loss.
4. & 5. Determine the amount of impairmentloss assuming that the estimated undiscounted sum of future cashflows is $16,500,000 instead of $17,200,000 and $29,150,000 insteadof $17,200,000.

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In: AccountingGeneral Optic Corporation operates a manufacturing plant inArizona. Due to a significant decline in demand...General Optic Corporation operates a manufacturing plant inArizona. Due to a significant decline in demand for the productmanufactured at the Arizona site, an impairment test is deemedappropriate. Management has acquired the following information forthe assets at the plant:Cost$43,500,000Accumulated depreciation15,300,000General’s estimate of the total cash flows to be generated byselling the productsmanufactured at its Arizona plant, not discounted to presentvalue17,200,000The fair value of the Arizona plant is estimated to be$16,500,000.Required:1. & 2. Determine the amount of impairmentloss. If a loss is indicated, where would it appear in GeneralOptic’s multiple-step income statement?3. If a loss is indicated, prepare the entry torecord the loss.4. & 5. Determine the amount of impairmentloss assuming that the estimated undiscounted sum of future cashflows is $16,500,000 instead of $17,200,000 and $29,150,000 insteadof $17,200,000.


Cost	$	43,500,000
Accumulated depreciation		15,300,000
General’s estimate of the total cash flows to be generated byselling the products manufactured at its Arizona plant, not discounted to presentvalue		17,200,000