Lou Lou and Company purchased a piece of machinery 2 years ago for $50,000 and has depreciation to date of $15,000. The fair market value of the asset is $30,000, but the company believes it can achieve $34,000 in net future cash flows from the asset. Costs to dispose of the asset is $200. Assuming the asset is held for use, determine if the asset is impaired. If so, what is the amount of the write-off?
The asset is impaired and Lou Lou should record a $1,000 loss on impairment.
The asset is impaired and Lou Lou should record a $5,200 loss on impairment.
The asset is NOT impaired.
The asset is impaired and Lou Lou should record a $5,000 loss on impairment.
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