Sandhill Industries has several assets as part of a cash, generating unit that have limited use due to changing market trends and declining demand for the product produced by these assets. Management estimates that the carrying value of these assets is $86600 and the assets have no other use. The company intends on producing this product for three more years prior to disposing of the assets. The net future cash flows related to the product production and sale of the equipment is $87600, while the present value of the cash flows is $81950. The fair value less the cost of disposal of the assets is estimated at $71300. What is the value of the impairment loss under the rational entity model? $0, there is no impairment loss $4650 $15300 O $5450
Sandhill Industries has several assets as part of a cash, generating unit that have limited use due to changing market trends and declining demand for the product produced by these assets. Management estimates that the carrying value of these assets is $86600 and the assets have no other use. The company intends on producing this product for three more years prior to disposing of the assets. The net future cash flows related to the product production and sale of the equipment is $87600, while the present value of the cash flows is $81950. The fair value less the cost of disposal of the assets is estimated at $71300. What is the value of the impairment loss under the rational entity model? $0, there is no impairment loss $4650 $15300 O $5450
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter19: Capital Investment
Section: Chapter Questions
Problem 6CE
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![Sandhill Industries has several assets as part of a cash, generating unit that have limited use due to changing market trends and
declining demand for the product produced by these assets. Management estimates that the carrying value of these assets is $86600
and the assets have no other use. The company intends on producing this product for three more years prior to disposing of the assets.
The net future cash flows related to the product production and sale of the equipment is $87600, while the present value of the cash
flows is $81950. The fair value less the cost of disposal of the assets is estimated at $71300. What is the value of the impairment loss
under the rational entity model?
O $0, there is no impairment loss
O $4650
O $15300
O $5450](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8ca35aa5-9357-4809-ac84-51625c94e4c3%2F75f635d2-0349-4a5f-b782-4dca44f19921%2F5175q65_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Sandhill Industries has several assets as part of a cash, generating unit that have limited use due to changing market trends and
declining demand for the product produced by these assets. Management estimates that the carrying value of these assets is $86600
and the assets have no other use. The company intends on producing this product for three more years prior to disposing of the assets.
The net future cash flows related to the product production and sale of the equipment is $87600, while the present value of the cash
flows is $81950. The fair value less the cost of disposal of the assets is estimated at $71300. What is the value of the impairment loss
under the rational entity model?
O $0, there is no impairment loss
O $4650
O $15300
O $5450
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