Question Two (7 marks) Adam's Bikes produces specialized bicycle frames. The production process uses two...
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Question Two (7 marks) Adam's Bikes produces specialized bicycle frames. The production process uses two machines, which together form a cash generating unit (CGU). The following information is relevant to the evaluation of impairment for these machines. Net carrying value Fair value less costs to sell Value in use Bending machine Welding machine Total CGU 550,000 450,000 1,000,000 380,000 See requirement See requirement 950,000 Required: a) Assume that the welding machine has a fair value less costs to sell of $420,000. Determine the amount of impairment that should be recorded for the cash generating unit and for each of the two machines. b) Assume that the welding machine has a fair value less costs to sell of $455,000. Determine the amount of impairment that should be recorded for the cash generating unit and for each of the two machines
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