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vazorg [7]
3 years ago
8

Flannery Corporation owns machinery with a book value of $520,000. It is estimated that the machinery will generate future cash

flows of $465,000. The machinery has a fair value of $415,000. Florence should recognize a loss on impairment of...(a)$0.(b)$50,000.(c)$55,000.(d)$105,000.
Business
1 answer:
Aleonysh [2.5K]3 years ago
5 0

Answer:

(d)$105,000.

Explanation:

Since the book value is more than the generated future cash flows so book value cannot be recovered. In this case, the generated future cash flows are ignored  

In this scenario, we compare the values between book value and the fair value of machinery, the difference would be the loss on impairment of the asset

In mathematically,  

= Book value of machinery - fair value of machinery

= $520,000 - $415,000

= $105,000

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Answer: 13%

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As per the given figures in the question we can say that cost of equity can be determined with the help of dividend discount model, which can be equated as follows :-

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A. $190,000

Explanation:

The breakdown analysis of Balance Sheet and Income Statement in terms of Cash in the form of Operating, Investing and Financing activities is known as Cash Flow Statement or the Statement of Cash Flows.

In Investing Activities Cash Flow we simply add Cash Proceeds from the sale of assets and subtract any proceeds from the purchases. The difference between the two is called Cash Flow from investing activities and it how much cash surplus or deficit we have from Investing Activities of Cash.

In the Statement of Cash Flows calculating Net Cash provided by investing activities is simple. Simply add Sale of Land, Sale of Equipment and Issuance of Common Stock. Subtract Purchase of Equipment from it and you will get the Net Cash Flow from Investing Activities.

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