Impairment Amando Bacot purchases equipment for $10,000 on January 1, 2022. The equipment has a residual value of $1,000 and a 9 year useful life. Bacot uses straight line depreciation. On December 31, 2023 Bacot determines that the equipment may be impaired as the demand for the product it produces has decreased. The expected net cash flows from the equipment are $500 per year for each of the next 7 years (assume cash flows occur at the end of each year). If I assume an effective interest rate of 10 percent, what impairment if any, does Bacot record on December 31, 2023? What depreciation expense does Bacot record in 2024? NC STATE UNIVERSITY

Impairment Amando Bacot purchases equipment for $10,000 on January 1, 2022. The equipment has a residual value of $1,000 and a 9 year useful life. Bacot uses straight line depreciation. On December 31, 2023 Bacot determines that the equipment may be impaired as the demand for the product it produces has decreased. The expected net cash flows from the equipment are $500 per year for each of the next 7 years (assume cash flows occur at the end of each year). If I assume an effective interest rate of 10 percent, what impairment if any, does Bacot record on December 31, 2023? What depreciation expense does Bacot record in 2024? NC STATE UNIVERSITY

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter9: Current Liabilities And Contingent Obligations

Section: Chapter Questions

Problem 10RE

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