Question
ABC acquired equipment on Oct 1. 2019 for $200,000 total cost. ABC estimates a useful life of 5 years or 50,000 hours with a residual
ABC acquired equipment on Oct 1. 2019 for $200,000 total cost. ABC estimates a useful life of 5 years or 50,000 hours with a residual value of $40,000. During 2019, actual usage was 3,000 hours.
ABC evaluted the equipment for impairment on Dec 31 2021, At that time, the equipment was expect to generate 35,000 a year for two years. ABCs cost of capital for similar investments is 5% and ABC plans to continued using the equipment.
If the asset was impaired, what was the amount of the impairment loss rounded to the nearest thousand? If the asset was not impaired, choose 0.
a. 7,000
b. 0
c. 2,000
d. 5,000
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