Business, 30.11.2020 04:20 LordBooming

You have the following information about an impairment process of McDonalds Co. machine At the end of 2019 McDonalds Co. tests a machine for impairment. The machine has a historical cost of $210000 and residual value of $10000. It has an estimated remaining useful life of 6 years. Because there is little market-related information on which to base a recoverable amount based on fair value, McDonalds Co. determines the machine’s recoverable amount should be based on value-in-use. McDonalds Co. uses a discount rate of 10 percent McDonalds Co. analysis indicates that its future cash flows will be $30,000 each year for 6 years, and it will receive the residual value at the end of the five years. It is assumed that all cash flows occur at the end of the year.

Added information

1- Machine accumulated depreciation is $20000 (straight Line Method)

2- Present value of $1 payment for 6 years is: 4.8522

3- Present value of $1 payment after years is 0.5822

Required:

You are required to:

1- Make impairment test for the equipment

2- Journalize the result of the impairment

Answers: 3

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You have the following information about an impairment process of McDonalds Co. machine At the end o...