Question: Testbank Problem 136 (Part Level Submission) Presented below is information related to equipment owned by Pina Colada Company at December 31, 2020. Cost $8,120,000 Accumulated

Testbank Problem 136 (Part Level Submission)

Presented below is information related to equipment owned by Pina Colada Company at December 31, 2020.
Cost $8,120,000
Accumulated depreciation to date 928,000
Expected future net cash flows 5,800,000
Fair value 3,944,000
Assume that Pina Colada will continue to use this asset in the future. As of December 31, 2020, the equipment has a remaining useful life of 4 years.

(a)

Fill the missing amounts and choose the correct option.
For Pina Colada company, the recoverability test compares $

to $

. As a result, the asset

failspasses

the recoverability test, because

the expected future net cash flowsthe expected present net cash flows

is/are less than

the book value of the assetthe market value of the asset

so a

gainloss

on impairment is recorded in 2020.

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