mber 31, Year 1, Brown Brothers purchased machine A for $770,000 and machine B for $300,000. The machines are depreciated on the straight-line basis over 10 years with no salvage ng the U.S. GAAP impairment analysis at year-end of Year 6, Brown determines that the expected future cash flows are $70,000 per year from machine A and $40,000 per year from ma 31, Year 6, the fair values of machines A and B are $300,000 and $180,000, respectively. What amount of impairment loss should Brown report on its Year 6 income statement under U 0,000 5,000 5,000

mber 31, Year 1, Brown Brothers purchased machine A for $770,000 and machine B for $300,000. The machines are depreciated on the straight-line basis over 10 years with no salvage ng the U.S. GAAP impairment analysis at year-end of Year 6, Brown determines that the expected future cash flows are $70,000 per year from machine A and $40,000 per year from ma 31, Year 6, the fair values of machines A and B are $300,000 and $180,000, respectively. What amount of impairment loss should Brown report on its Year 6 income statement under U 0,000 5,000 5,000

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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Question

On December 31, Year 1, Brown Brothers purchased machine A for $770,000 and machine B for $300,000. The machines are depreciated on the straight-line basis over 10 years with no salvage value. Brown reviews its assets for impairment annually.
While doing the U.S. GAAP impairment analysis at year-end of Year 6, Brown determines that the expected future cash flows are $70,000 per year from machine A and $40,000 per year from machine B over the remaining lives of the assets. At
December 31, Year 6, the fair values of machines A and B are $300,000 and $180,000, respectively. What amount of impairment loss should Brown report on its Year 6 income statement under U.S. GAAP?
O A. $50,000
B. $85,000
O C. $35,000
OD. $0

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