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16 December, 03:57

Oak Inc. has the following information regarding its assets: Book Value Estimated Cash Flows Fair Value Equipment $35,000 $30,000 $28,000 Building $68,000 $70,000 $65,000 Patent $30,000 $34,000 $32,000 What amount of loss should be recorded due to asset impairment? a. $10,000. b. $9,000. c ... $8,000. d. $7,000.

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  1. 16 December, 06:10
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    d. $7,000.

    Explanation:

    The computation of the loss recorded due to asset impairment is shown below:

    = Book value - fair value

    = $35,000 - $28,000

    = $7,000

    If we consider the building and the patent we see that the estimated cash flows are more than the book value, so no loss on impairment should be taken place

    Therefore, only $7,000 should be recorded as a loss on impairment of the asset
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