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Lou Lou and Company purchased a piece of machinery 2 years ago for $50,000 and has depreciation to date of $15,000. The fair market value of the asset is $30,000, but the company believes it can achieve $34,000 in net future cash flows from the asset. Costs to dispose of the asset is $200. Assuming the asset is held for use, determine if the asset is impaired. If so, what is the amount of the write-off?     The asset is impaired and Lou Lou should record a $1,000 loss on impairment.     The asset is impaired and Lou Lou should record a $5,200 loss on impairment.     The asset is NOT impaired.     The asset is impaired and Lou Lou should record a $5,000 loss on impairment.

Lou Lou and Company purchased a piece of machinery 2 years ago for $50,000 and has depreciation to date of $15,000. The fair market value of the asset is $30,000, but the company believes it can achieve $34,000 in net future cash flows from the asset. Costs to dispose of the asset is $200. Assuming the asset is held for use, determine if the asset is impaired. If so, what is the amount of the write-off?     The asset is impaired and Lou Lou should record a $1,000 loss on impairment.     The asset is impaired and Lou Lou should record a $5,200 loss on impairment.     The asset is NOT impaired.     The asset is impaired and Lou Lou should record a $5,000 loss on impairment.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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  1. Lou Lou and Company purchased a piece of machinery 2 years ago for $50,000 and has depreciation to date of $15,000. The fair market value of the asset is $30,000, but the company believes it can achieve $34,000 in net future cash flows from the asset. Costs to dispose of the asset is $200. Assuming the asset is held for use, determine if the asset is impaired. If so, what is the amount of the write-off?

       

    The asset is impaired and Lou Lou should record a $1,000 loss on impairment.
       

    The asset is impaired and Lou Lou should record a $5,200 loss on impairment.
       

    The asset is NOT impaired.
       

    The asset is impaired and Lou Lou should record a $5,000 loss on impairment.
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