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How much impairment provision should be recorded

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Question - Gordon Machinery acquired a cutting machine 3 years ago for $10 million. The estimated useful life in 8nyears, with are the residual value of 10%.straight-line depreciation method is applied. At the end of year 4, the management decided to test the machine for impairment. The market price for similar machines in the second-hand market is $2 million, and $0.1 million agent fee will be charged for every transaction. The future cash flow generated from the machine is estimated to be $1.5millon cash year. If a discount rate of 10% is applied, how much impairment provision should be recorded?

Reference no: EM132910632

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