Final answer:
Seymour Tile should record an impairment loss of $70,000 on January 1, 2020, which is calculated by subtracting the machine's recoverable amount ($130,000) from its carrying amount ($200,000) on that date.
Step-by-step explanation:
To calculate the impairment loss Seymour Tile should record on January 1, 2020, for the machine, we need to compare the carrying amount of the machine on the balance sheet with the recoverable amount, following ASPE (Accounting Standards for Private Enterprises). The carrying amount is the original cost of the machine minus accumulated depreciation. Since the machine was bought for $570,000 and was expected to last 15 years with a residual value of $15,000, depreciation per year is (570,000 - 15,000) / 15 = $37,000. By January 1, 2020, the machine would have been depreciated for 10 years, so the accumulated depreciation is 10 x $37,000 = $370,000. The carrying amount on January 1, 2020, would therefore be $570,000 - $370,000 = $200,000.
The recoverable amount is the higher of the fair value less costs to sell and the machine's value in use. Since there's no active market for the machine and the company does not plan to dispose of it, we use the value in use. The value in use is based on the discounted future net cash flows which are given as $130,000. Thus, the recoverable amount is $130,000.
The impairment loss is the amount by which the carrying amount exceeds the recoverable amount. Impairment loss = Carrying Amount - Recoverable Amount = $200,000 - $130,000 = $70,000.
Therefore, Seymour should record an impairment loss of $70,000 on January 1, 2020.