A Drunk Driver Crashed into a Fully Loaded Gasoline Truck

question 34

Essay

A drunk driver crashed into a fully loaded gasoline truck while trying to pass on a city's Main Avenue bridge. The truck exploded and the heat of the fire caused a portion of the structure of the bridge to melt. The city did not use the modified approach to report the bridge. Rather, its historical cost of $10 million was being depreciated over 20 years with no expected salvage value. The bridge was 10 years old. Its current replacement cost is $20 million. The city's engineers estimate that it will take $8 million to restore the bridge.
REQUIRED:
a. What is the deflated restoration cost for the bridge, calculated as using the restoration approach?
b. If an impairment loss is calculated by dividing the deflated restoration cost by the asset's original historical cost and then multiplying that percentage times the carrying amount of the bridge, what is the city's impairment loss?
c. Assuming the city makes the $8 million of repairs, how should the city report this cost?

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Definitions:

Noam Chomsky

An influential thinker in linguistics and cognitive science, known for his theory of generative grammar and critique of behaviorism.

Linguistic-Relativity Hypothesis

A theory suggesting that language influences and shapes our cognitive abilities and the way we perceive and understand the world.

Cultural Perception

The way individuals interpret and understand phenomena through the lens of their own culture, including beliefs, values, and norms.