Your company rents computers to local businesses and schools. You have 1800 computers with a book value of $165,000. As a result of changing technology, your computers are more difficult to rent so you must drastically reduce your rental price, which causes a decrease in estimated future cash flows. The fair value of the computers is estimated to be $130,000 because of their outdated technology. Your company should report an asset impairment loss of:
A. $0.
B. $35,000.
C. $165,000.
D. $130,000.
Answer: B
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