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Your company rents computers to local businesses and schools. You have 3600 computers with a book value of $180,500. As a result of changing technology, your computers are more difficult to rent so you must drastically reduce your rental price, which causes a decrease in estimated future cash flows. The fair value of the computers is estimated to be $138,000 because of their outdated technology. Your company should report an asset impairment loss of: Select one: O A. $138,000. O B. $42,500. O C. $180,500. O D. $0.

Your company rents computers to local businesses and schools. You have 3600 computers with a book value of $180,500. As a result of changing technology, your computers are more difficult to rent so you must drastically reduce your rental price, which causes a decrease in estimated future cash flows. The fair value of the computers is estimated to be $138,000 because of their outdated technology. Your company should report an asset impairment loss of: Select one: O A. $138,000. O B. $42,500. O C. $180,500. O D. $0.

FINANCIAL ACCOUNTING
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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Your company rents computers to local businesses and schools. You have 3600 computers with a book value of $180,500. As a result of changing technology, your computers are more difficult to rent so you must drastically reduce your rental price, which causes a decrease in estimated future cash flows. The fair value of the computers is estimated to be $138,000 because of their outdated technology. Your company should report an asset impairment loss of: Select one: O A. $138,000. O B. $42,500. O C. $180,500. O D. $0.
Transcribed Image Text:Your company rents computers to local businesses and schools. You have 3600 computers with a book value of $180,500. As a result of changing technology, your computers are more difficult to rent so you must drastically reduce your rental price, which causes a decrease in estimated future cash flows. The fair value of the computers is estimated to be $138,000 because of their outdated technology. Your company should report an asset impairment loss of: Select one: O A. $138,000. O B. $42,500. O C. $180,500. O D. $0.
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