Problem 19-3 (AICPA Adapted)Bubba Company determined that there had been a significantdecrease in market value of an equipment used in themanufacturing process. At year-end, the entity compiled thefollowing information:5,000,0003,000,000Original cost of equipmentAccumulated depreciationExpected undiscounted net future cash inflowsrelated to the equipmentFair value of equipment1,750,0001,250,000What amount of impairment loss should be reported?3,250,000b. 3,750,000750,000250,000a.с.d.

Carrying amount of equipment = cost - depreciation = 5,000,000-3,000,000 =2,000,000.

Answered: What amount of impairment loss should…

Business

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What amount of impairment loss should be reporte a. 3,250,000

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

Problem 19-3 (AICPA Adapted)
Bubba Company determined that there had been a significant
decrease in market value of an equipment used in the
manufacturing process. At year-end, the entity compiled the
following information:
5,000,000
3,000,000
Original cost of equipment
Accumulated depreciation
Expected undiscounted net future cash inflows
related to the equipment
Fair value of equipment
1,750,000
1,250,000
What amount of impairment loss should be reported?
3,250,000
b. 3,750,000
750,000
250,000
a.
с.
d.

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