The management of Splish Brothers Inc., a small private company that uses the cost recovery impairment model, was discussing whether certain equipment should be written down as a charge to current operations because of obsolescence. The assets had a cost of $870,000, and depreciation of $360,000 had been taken to December 31, 2020. On December 31, 2020, management projected the undiscounted future net cash flows from this equipment to be $350,000, and its fair value to be $220,000. The company intends to use this equipment in the future.

The management of Splish Brothers Inc., a small private company that uses the cost recovery impairment model, was discussing whether certain equipment should be written down as a charge to current operations because of obsolescence. The assets had a cost of $870,000, and depreciation of $360,000 had been taken to December 31, 2020. On December 31, 2020, management projected the undiscounted future net cash flows from this equipment to be $350,000, and its fair value to be $220,000. The company intends to use this equipment in the future.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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