On January 1, 2014 Hill Bowling purchased equipment for $3.5 million. The equipment is depreciated over 10 years and has no residual value but if sold would want to get $25,000. Hill uses the straight line method of depreciation. In 2018 new advanced bowling equipment came on the market. Hill believes the bowling equipment currently being used is going to become obsolete quicker than anticipated. Hill wants to complete an impairment test. Estimates are made concerning the net cash flows of $250,000 for the next five years. Hill uses a 14% discounted rate to evaluate other projects of this nature.
Required:
Complete the Impairment test for Hill's Bowling.

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The Answer of On January 1, 2014 Hill Bowling purchased equipment for $3.5 million. The equipment is depreciated over 10 years and has no residual value but if sold would want to get $25,000. Hill uses the straight line method of depreciation. In 2018 new advanced bowling equipment came on the market. Hill believes the bowling equipment currently being used is going to become obsolete quicker than anticipated. Hill wants to complete an impairment test. Estimates are made concerning the net cash flows of $250,000 for the next five years. Hill uses a 14% discounted rate to evaluate other projects of this nature.
Required:
Complete the Impairment test for Hill's Bowling.

On January 1, 2014 Hill Bowling Purchased Equipment for $3