Answer Happy

At the end of 2021, Purple Company tests a machine for impairment. The machine is carried at depreciated historical cost, and its carrying amount is $150,000. It has an estimated remaining useful life of 10 years. Management projected its fair value less cost of disposal to be $135,000. In addition, the machine's recoverable amount on the basis of a value-in-use calculation can be determined using a pretax discount rate of 9%. Management-approved budgets reflect estimated costs necessary to maintain the level of economic benefit expected to arise from the machine in its current condition. The following information related to future cash flows is available at the end of 2021, and it is assumed that all cash flows occur at the year end. Year Future Cash Flow Year Future Cash Flow 2022 $ 32.100 2027 $ 19.000 2023 19,000 2028 19,000 2024 19,000 2029 19,000 2025 19,000 2030 19.000 2026 19,000 2031 19,000 Instructions (a) Compute the amount of the impairment loss at December 31, 2021. (b) Prepare the journal entry to record the impairment loss, if any, at December 31, 2021.