Question
Alfredo's Pizza Cafe acquires an oven on January 1 of Year 1 for $10,000. Alfredo's capitalizes this asset and depreciates it using the straight-line method
Alfredo's Pizza Cafe acquires an oven on January 1 of Year 1 for $10,000. Alfredo's capitalizes this asset and depreciates it using the straight-line method with a 10-year useful life and salvage value of $2,000. On January 1 of year 4, the company learns that the asset's fair value is $6,000, and records an impairment loss to reduce the oven's net book value to $6,000. The estimated salvage value is still $2,000, and company does not alter its annual depreciation schedule as a result of the impairment. January 1 of Year 6, Alfredo's Pizza Cafe sells the oven for $7,000. What is the net book value of the sold asset?
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