Question - Asset Impairment
In 2015, Winnebago Industries recorded an impairment loss of $258,000 on its corporate plane. Assume that the plane originally cost the company $2,050,000 and had accumulated depreciation of $1,598,000 at the time of the impairment charge.
1. Why did the company record an impairment loss on the plane?
a) The corporate plane's net book value was less than it's fair value.
b) The corporate plane's fair value was less than it's net book value.
c) The corporate plane's original cost was less than it's fair value.
d) The corporate plane's fair value was less than it's original cost.
2. Explain how the company determined the amount of the impairment loss.
a) Net book value of corporate plane less fair value of corporate plane.
b) Original cost of corporate plane less fair value of corporate plane.
c) Original cost of corporate plane less net book value of corporate plane.
d) Fair value of corporate plane less accumulated deprecation of corporate plane.
3. What was the plane's fair value at the end of 2015?