Use the Following Data to Solve the Following Questions:
-Frontier $\begin{array}{llcc}\text {Year 1}&\text {Year 2}&\text {Year 3}\\\hline \$ 4,000& \$ 6,000&\$ 7,000 \end{array}$

question 13

Multiple Choice

Use the following data to solve the following questions:
-Frontier Landscaping owns some equipment that is used in their operations. Management estimates that the equipment will last another three years and will generate the following future cash flows at the end of each year. $\begin{array}{llcc}\text {Year 1}&\text {Year 2}&\text {Year 3}\\\hline \$ 4,000& \$ 6,000&\$ 7,000 \end{array}$
Assuming Frontier Landscaping's equipment has a carrying value of $16,000, how much of an impairment loss must Frontier record?

• A) none as there is no impairment.
• B) $383
• C) $6,606
• D) $2,518

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Definitions:

Recency Effect

A cognitive bias that predisposes individuals to remember the most recently presented information better than information presented earlier.

Phi Phenomenon

An optical illusion wherein stationary objects shown in rapid succession, separated by short intervals, appear to be moving.

Chunking Effect

A cognitive process that enhances memory by breaking information down into smaller, manageable units or chunks.

Primacy Effect

The tendency to remember information at the beginning of a list better than information that comes later.