SAS Computers owns a patent on a computer processor. Theprocessor was developed and capitalized at a cost of €2,100,000 inthe beginning of 2015. It was expected to be economically usefulfor 7 years and have no residual value. At the beginning of 2018, anew processor was developed, making the old processor worth€900,000 (independent appraiser) with €200,000 total cost to sell.The present value of the processor’s future cash flows, given thedevelopment of the newer processor, is estimated to be €870,000. Atthis point, it is expected to have a useful life of 4 years with noresidual value. Is the processor impaired in 2018? If it isimpaired, prepare the to record the loss. Also prepare the journalentry for amortization in 2018. Show your work.
