Answer:
a. $29,000
b. $214,000
c. Yes
Step-by-step explanation:
a. Annual Depreciation expense:
= (Cost - salvage value)/ Useful life
= (330,000 - 40,000) / 10,000
= $29,000
b. Net book value at end of 4th year:
= Cost - 4 year depreciation
= 330,000 - (4 * 29,000)
= $214,000
c. One test to see if equipment is not impaired is that the Expected Undiscounted cashflows need to be higher than the net book value. This is not the case here as the Net Book value of $214,000 is higher than the expected Undiscounted cash inflows of $185,000. Equipment is therefore impaired.