Adam's Bikes Produces Specialized Bicycle Frames Required:
A

Adam's Bikes produces specialized bicycle frames. The production process uses two machines, which together form a cash generating unit (CGU). The following information is relevant to the evaluation of impairment for these machines.
$$\begin{array} { | l | r | r | r | } \hline & \text { Bending machine } & \text { Welding machine } & \text { Total CGU } \\\hline \text { Net carrying value } & 550,000 & 450,000 & 1,000,000 \\\hline \text { Fair value less costs to sell } & 380,000 & \text { See requirement } & \text { See requirement } \\\hline \text { Value in use } & & & 950,000 \\\hline\end{array}$$ Required:
a. Assume that the welding machine has a fair value less costs to sell of $420,000. Determine the amount of impairment that should be recorded for the cash generating unit and for each of the two machines.
b. Assume that the welding machine has a fair value less costs to sell of $455,000. Determine the amount of impairment that should be recorded for the cash generating unit and for each of the two machines.