Regis Inc Bought a Machine on January 1, 2004 for $400,000

question 55

Multiple Choice

Regis Inc. bought a machine on January 1, 2004 for $400,000. The machine had an expected life of 20 years and was expected to have a salvage value of $40,000. On July 1, 2014, the company reviewed the potential of the machine and determined that its undiscounted future net cash flows totaled $200,000 and its discounted future net cash flows totaled $140,000. If no active market exists for the machine and the company does not plan to dispose of it, what should Regis record as an impairment loss on July 1, 2014?

• A) $ 0
• B) $11,000
• C) $20,000
• D) $71,000

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Definitions:

Foreign Suppliers

Companies or individuals located outside the purchasing country that provide goods or services to businesses or consumers within that country.

Monitor

To observe and check the progress or quality of something over a period of time.

Society

A community of individuals bound together by territorial, cultural, or social ties, manifesting patterns of relationships and norms.

Compliance

The act of adhering to laws, regulations, guidelines, and specifications relevant to one’s business or activities.