Discuss and comment on the impairment of beer machine

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Problem 1: Cheer and Beer Limited has a machine with a carrying amount of $750,000. While Cheer and Beer proposes to scale down its operation, it is required to review the impairment of its assets, including the machine. A director of Cheer and Beer operating a similar operation offers to buy the machine at $1 million. Simultaneously, Cheer and Beer estimates that the net cash in?ow generated from the operation of the machine will be $300,000 in the next year, and then the machine can be returned to the machine suppliers at $500,000. Cheer and Beer thus concludes that no impairment loss should be required on the machine. Discuss and comment on the impairment of Cheer and Beer's machine.

Reference no: EM132812983

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