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Use the following information to answer the next (2) questions: Pitchfork, Inc. has the following...

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Accounting

Use the following information to answer the next (2) questions:

Pitchfork, Inc. has the following equipment reported on their year-end balance sheet at December 31, 20x1. Conditions warrant that it be reviewed for potential impairment. Use the following information to answer the next (2) questions:

Asset

Classification

Purchase Price

Accumulated Depreciation

Expected Future Cash Flows

(undiscounted)

Fair Value

Remaining Useful Life

Equip FJ-670

Operating

Asset continue in use

$1,200,000

$541,500

$120,000/year

$595,000

6 years

1. Assume Pitchfork complies with U.S. GAAP reporting standards. Determine the amount of the impairment loss (if any):

2. Assume instead that Pitchfork follows IFRS reporting standards. Determine the impairment loss for Equipment FJ-670 (if any). Assume Pitchfork determines a discount rate of 8% is appropriate to find the present value of the cash flows for this asset. The PVOA (8%, 6n) is 4.6229. Pitchfork does not anticipate any salvage value. Additionally, the company estimates a cost to sell for the asset is equal to 5% of its Fair Value. Impairment Loss:

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