Question: During December 2010, Bubba Inc. determined that there had been a significant decrease in the market value of its equipment used in its manufacturing process.

During December 2010, Bubba Inc. determined that there had been a significant decrease in the market value of its equipment used in its manufacturing process. At December 31, 2010, Bubba compiled the information below.

Original cost of the equipment $500,000 Accumulated depreciation 300,000 Expected net future cash inflows (undiscounted)

related to the continued use and eventual disposal of the equipment 175,000 Fair value of the equipment 125,000 What is the amount of impairment loss that should be reported on Bubba’s income statement prepared for the year ended December 31, 2010?

a. $ 75,000

b. $ 25,000

c. $325,000

d. $375,000

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