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 $ million.
The machine could be sold for $ million less a commission.
If the company was forced to sell immediately, the proceeds would likely be $ million.
If the machine continues to be used in production, it is anticipated to generate $ million of cash flows for the next five years. It would require annual maintenance costs of $ a year. The equipment could be sold for $ at the end of the five years.
Assume Yuan has a discount rate of
PV of $ PVA of $ and PVAD of $Use appropriate factors from the tables provided. Round time value factor to 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.
