Robertson Inc. bought a machine on January 1, 2000 for $300,000. The machinehad an expected life of 20 years and was expected to have a salvage value of$30,000. Robertson uses straight-line depreciation. On July 1, 2010, the companyreviewed the potential of the machine and determined that its undiscounted futurenet cash flows totaled $150,000 and its discounted future net cash flows totaled$105,000. If no active market exists for the machine and the company does notplan to dispose of it, what should Robertson record as an impairment loss on July1, 2010?a. $ 0b. $ 8,250c. $15,000d. $53,250
Robertson Inc. bought a machine on January 1, 2000 for $300,000. The machinehad an expected life of 20 years and was expected to have a salvage value of$30,000. Robertson uses straight-line depreciation. On July 1, 2010, the companyreviewed the potential of the machine and determined that its undiscounted futurenet cash flows totaled $150,000 and its discounted future net cash flows totaled$105,000. If no active market exists for the machine and the company does notplan to dispose of it, what should Robertson record as an impairment loss on July1, 2010?a. $ 0b. $ 8,250c. $15,000d. $53,250
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Robertson Inc. bought a machine on January 1, 2000 for $300,000. The machine
had an expected life of 20 years and was expected to have a salvage value of
$30,000. Robertson uses straight-line
reviewed the potential of the machine and determined that its undiscounted future
net
$105,000. If no active market exists for the machine and the company does not
plan to dispose of it, what should Robertson record as an impairment loss on July
1, 2010?
a. $ 0
b. $ 8,250
c. $15,000
d. $53,250
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