Question
Regis Inc. bought a machine on January 1, 2004 for $400,000. The machine had an expected life of 20 years and was expected to have
Regis Inc. bought a machine on January 1, 2004 for $400,000. The machine had an expected life of 20 years and was expected to have a salvage value of $40,000. On July 1, 2014, the company reviewed the potential of the machine and determined that its undiscounted future net cash flows totaled $200,000 and its discounted future net cash flows totaled $140,000. If no active market exists for the machine and the company does not plan to dispose of it, what should Regis record as an impairment loss on July 1, 2014?
a. $ 0
b. $11,000
c. $20,000
d. $71,000
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