Marshall Inc. owns an automobile costing $40,000. The automobile was purchased on January 1, 2016, and has is estimated to have a useful life of 8 years and a residual value of $3000. On January 1, 2020 it is discovered that the automobile has a market value of $15,000. Marshall Inc. should therefore: 1. Take no action, as no transaction is required in this situation 2. None of the answers are correct 3. Record an Impairment loss of $8125 4. Record an impairment loss of $3500 5. Record an Impairment loss of $6500
Marshall Inc. owns an automobile costing $40,000. The automobile was purchased on January 1, 2016, and has is estimated to have a useful life of 8 years and a residual value of $3000. On January 1, 2020 it is discovered that the automobile has a market value of $15,000. Marshall Inc. should therefore: 1. Take no action, as no transaction is required in this situation 2. None of the answers are correct 3. Record an Impairment loss of $8125 4. Record an impairment loss of $3500 5. Record an Impairment loss of $6500
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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(Mulitple Choice Question)
Marshall Inc. owns an automobile costing $40,000. The automobile was purchased on January 1, 2016, and has is estimated to have a useful life of 8 years and a residual value of $3000. On January 1, 2020 it is discovered that the automobile has a market value of $15,000. Marshall Inc. should therefore:
1. Take no action, as no transaction is required in this situation
2. None of the answers are correct
3. Record an Impairment loss of $8125
4. Record an impairment loss of $3500
5. Record an Impairment loss of $6500
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