Prepare journal entries, accounting, Basic Statistics

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Quick Company acquired a piece of equipment in Year 1 st cost $100,000. The equipment has a 10-year estimated life, zero salvage value and a depreciation of a straight line basis. Technological innovations take place in the industry in which the company operates in Year 4. Quick gathers the following information for the piece of equipment at the end of Year 4: Expected future undiscounted cash flow from continued use - $59,000, Present Value of expected future cash flows from continued use - $51,000, Net Selling price in the used equipment market - $50,000. At the end of Year 6, it is discovered that the technological innovations related to this equipment are not as effective as first expected.Quick estimates the following for this piece of equipment at the end of Year 6: expected future undiscounted cash flow from continued use - $50,000, Present Valus of expected future cash flows from continued use - $44,000, Net Selling price in the used equipment market - $42,000.
Required: a. Discuss whether Quick Company must conduct an impairment test on this piece of equipment at December 31, Year 2004.
b. Determine the amount at which Quick Company should carry this piece of equipment on its balance sheet at December 31, Year 5, December 31, Year 5, and December 31, Year 6. Prepare any related journal entries.

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