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 gain or loss on the asset sale? Enter a positive number for a gain and a negative number for a loss.
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 gain or loss on the asset sale? Enter a positive number for a gain and a negative number for a loss.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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
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