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Four years ago Omega Technology, Inc., acquired a machine to use in its computer chip...

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Accounting

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Four years ago Omega Technology, Inc., acquired a machine to use in its computer chip manufacturing operations at a cost of $35,000,000. The firm expected the machine to have a seven-year useful life and a zero salvage value. The company has been using straight-line depreciation for the asset. Due to the rapid rate of technological change in the industry, at the end of Year 4 , Omega estimates that the machine is capable of generating (undiscounted) future cash flows of $11,000,000. Based on the quoted market prices of similar assets, Omega estimates the machine to have a fair value of $9,500,000. Required: 1. What is the machine's book value at the end of Year 4 ? 2. Should Omega recognize an impairment of this asset? If so, what amount of the impairment loss should be recognized? 3. At the end of Year 4 , at what amount should the machine appear in Omega's balance sheet

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