Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. yuan inc. has a large piece of machinery, and mana

Yuan Inc. has a large piece of machinery, and management has determined there is potential...

80.2K

Verified Solution

Question

Accounting

Yuan Inc. has a large piece of machinery, and management has determined there is potential impairment. This piece of machinery has independent cash inflows. The following information relates to the machine:
Net book value is $30 million.
The machine could be sold for $16 million less a 10% commission.
If the company was forced to sell immediately, the proceeds would likely be $13 million.
If the machine continues to be used in production, it is anticipated to generate $7 million of cash flows for the next five years. It would require annual maintenance costs of $300,000 a year. The equipment could be sold for $100,000 at the end of the five years.
Assume Yuan has a discount rate of 5%.
(PV of $1, PVA of $1, and PVAD of $1.)(Use appropriate factor(s) from the tables provided. Round time value factor to 5 decimal places.)
Required:
Discuss whether the machine is impaired?
Yes
No
If it is, what is the amount of the impairment loss? (Enter answer in whole dollars, not in million.)
image

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Finance
1.2K views

Big Brothers, Inc. borrows $370,913 from the bank at 8.66 percent per year, compounded annually, to purchase...

Programming
1.2K views

Discuss with your classmates, the impact of Java from a personal, business, and societal perspective. How...

Mechanical Engineering
1.2K views

Water is discharged from a pipe outlet at a rate of 60l/s at 120.8 kPa absolute...

Physics
1.2K views

54 A light ray I is incident on a plane mirror M The mirror is...

Geometry
1.2K views

Which solid figure is represented by this globe x x X A cylinder B cube...

Statistics
1.2K views

A survey was conducted at a local ballroom dance studio asking students if they had...

Accounting
1.2K views

Please show formula used to get answer. ...

Accounting
1.2K views

Required informotion Problem 15.4A (Algo) Recording, adjusting, and reporting stock investments...

Accounting
1.2K views

Suppose that on June 1, Bash Gyrations, a disc jockey service, creates a pelfy cash...

Accounting
1.2K views

82.French Impressionists is an independent cinema located in Melbourne. The cinema specialises in showing French...

Accounting
1.2K views

Audiophonics Limited manufactures and sells high-quality and durable ear buds for use with personal electronics...

Accounting
1.2K views

Whispering Company asks you to review its December 31,2025 , inventory values and prepare the...