On January 1, 2016 Hill Bowling purchased equipment for $3.5 million. The equipment is being depreciated by the straight-line method over 10 years with no residual value. In 2020, new advanced bowling equipment has come on the market. As a result, Hill believes the bowling equipment currently being used is going to become obsolete quicker than anticipated, so Hill wants to complete an impairment test on that equipment. Hill estimates that the net cash flows from using the current equipment will be $250,000 per year for the next five years. Hill also expects it could sell the current equipment immediately for $25,000. Hill uses a 14% discounted rate to evaluate other projects of this nature.
Required:
Complete the Impairment test for Hill Bowling. PV of $1.519
PV of an annuity 3.433
FV of $11.925
FV of an annuity 6.610

Question

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The Answer of On January 1, 2016 Hill Bowling purchased equipment for $3.5 million. The equipment is being depreciated by the straight-line method over 10 years with no residual value. In 2020, new advanced bowling equipment has come on the market. As a result, Hill believes the bowling equipment currently being used is going to become obsolete quicker than anticipated, so Hill wants to complete an impairment test on that equipment. Hill estimates that the net cash flows from using the current equipment will be $250,000 per year for the next five years. Hill also expects it could sell the current equipment immediately for $25,000. Hill uses a 14% discounted rate to evaluate other projects of this nature.
Required:
Complete the Impairment test for Hill Bowling. PV of $1.519
PV of an annuity 3.433
FV of $11.925
FV of an annuity 6.610

On January 1, 2016 Hill Bowling Purchased Equipment for $3