Determine whether the assembly line is impaired

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Reference no: EM133973708

Problem

Due to increased competition from low-cost foreign manufacturers, Catan's Toy Company is experiencing significant declines in sales. The company produces its toys from an assembly line. The equipment in this assembly line has not been previously revalued or impaired. Get the instant assignment help. For the year ending December 31, 2026, the controller gathered the following information relating to the assembly line equipment, which is considered to be a cash generating unit:

Original cost	$6,379,000
Accumulated depreciation	2,400,000
Fair value	3,247,000
Costs to sell	145,000
Risk adjusted cost of capital	6%

Incremental cash flows for
-2027	$1,100,000
-2028	1,000,000
-2029	800,000
-2030	900,000
-2031 and thereafter	0

Task

Determine whether the assembly line is impaired, and if so, the amount of the impairment.

Reference no: EM133973708

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