Winger, Inc. is in the business of renting medical equipment for home health care. New government standards for lifts for disabled patients have rendered some equipment obsolete.
Winger owns 10 four-year-old machines, each with a cost of $6,000. They have been depreciated using the straight-line method over an estimated life of 10 years. Since some parts can be used, they still have a resale value of approximately $1,000 each. Explain what accounting measure is required, what the effects on the financial statements will be (including amounts), and why this measure is important to creditors of Winger.