Transcribed Image Text
Carli'sCarli'sDomino Manufacturing Company learned that one of its cuttingmachines is obsolete. Although the company will continue to usethis machinery in the? future, management believes that animpairment? write-down is required. The following informationrelates to the cutting? machine:The firm estimates that the machine has a useful life of 10years and it has used it for four years. It has no salvagevalue.Cost = $3,218,000Accumulated Depreciation (up to the date of the impairment test)= $1,285,000Total Estimated future cash flows = $1,234,000Total Discounted future cash flows = $1,063,000Estimated Fair Value = $1,044,000Costs to sell = $8,000Remaining Useful Life From the Impairment Date = 6 yearsRequirements:a.Prepare the journal entry required to record the impairmentloss.b.Assuming that Carli's uses the? straight-line method with noresidual? value, prepare the journal entry to record the reviseddepreciation expense for the first year immediately following theimpairment.c.Assume that two years following the impairment? write-down, thefair value of the asset falls to $729,000. The sum of theundiscounted future cash flows is $753,000. What is the carryingvalue of the asset at this? time? Prepare any journal entrynecessary to reflect the change in fair value.