Question
Tom's Knick-Knacks is assessing its knick-knack machine, using straight-line depreciation, for annual impairment at 12/31/2020. As part of their assessment, Tom observed the following: Original
Tom's Knick-Knacks is assessing its knick-knack machine, using straight-line depreciation, for annual impairment at 12/31/2020. As part of their assessment, Tom observed the following:
Original cost of the machine (10 year useful life)
$100,000
Accumulated depreciation of the machine (for 3 years)
30,000
Estimated undiscounted cash flows from the machine
65,000
Estimated fair value of the machine (if sold)
58,000
What amount of impairment loss, if any, would this company be required to record for its knick-knack machine at 12/31/2020 under U.S. GAAP using the two-step approach?
Selected Answer:E.None of the answers are correct.
Answers:A.$65,000
B.$70,000
C.$10,000
D.$58,000
E.None of the answers are correct.
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