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Calculate the amount of any impairment loss

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Question - On January 1, 2020, Travis Company purchased machinery costing $3,000,000. The company uses straight-line depreciation assuming the machinery's useful life to be 10 years and its residual value to be $600,000.

At the end of 2023, the company felt that technological advances had caused an impairment of its machinery and that the remaining useful life of the machinery was only four years. The company estimates the machinery will generate net cash inflows of $400,000 over each of the next four years. The fair market value of the equipment at the end of 2023 is $1,141,992.

Required -

a Determine if an impairment loss has occurred. (Show all calculations).

b. Calculate the amount of any impairment loss to be recognized.

Reference no: EM133102461

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