Question 31 Sheridan Company has equipment with a carrying amount of $2570000. The expected future net cash flows from the equipment are $2610000, and its fair value is $2047000. The equipment is expected to be used in operations in the future. What amount (if any) should Sheridan report as an impairment to its equipment? O $563000. O No impairment should be reported. O $523000. O $40000.

Question 31 Sheridan Company has equipment with a carrying amount of $2570000. The expected future net cash flows from the equipment are $2610000, and its fair value is $2047000. The equipment is expected to be used in operations in the future. What amount (if any) should Sheridan report as an impairment to its equipment? O $563000. O No impairment should be reported. O $523000. O $40000.

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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7 A company owns an asset with an original cost of $300,000 and a current book value of $160,000. During a review of the asset for impairment, the company estimates the expected future cash flows from the use and disposal of the asset to be $200,000. There is an active market for this asset, and the fair value of the asset, calculated as the present value of expected future cash flows, is $140,000. Should this asset be considered impaired? O No, because the estimate of expected future cash flows (undiscounted) is greater than the book value. O No, because the estimate of expected future cash flows (undiscounted) is greater than the actual fair value. OYes, because fair value is less than the original cost. O Yes, because the fair value is less than the book value.
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28. A tangible fixed asset has a book value of $50,000. Its fair value is $47,000. The sum of the estimated future cash flows is $50,500. The company will recognize: a. $3,000 impairment loss b. $3,500 impairment loss c. $500 impairment gain d. None of the above.
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