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Redpoint Company has some manufacturing equipment which costs $9.1 million and has a net book...

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Accounting

Redpoint Company has some manufacturing equipment which costs $9.1 million and has a net book value of $4.7 million. Redpoint's management expects the equipment to generate future cash flows of $4 million. The equipment's fair value is $3.4 million. Is the asset impaired? If yes, how much is the asset impairment loss?

  • Yes, the impairment loss is $0.70 million.

  • No, the asset is not impaired.

  • Yes, the impairment loss is $1.30 million.

  • Yes, the impairment loss is $5.70 million.

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