Computing and Assessing Plant Asset ImpairmentZeibart Company purchased equipment for $225,000 on July 1, 2012, with an estimated useful life of 10 tears and expected salvage of $25,000. Straight line depreciation is used. On July 1, 2016, economic factors cause the fair value market to decline to $90,000. On this date, Zeibart examined for impairment and estimates $125,000 in future cash inflow related to use of this equipment.a. Is the equipment impaired at 7/1/2016? Explainb. If the equipment is impaired on 7/1/2016, compute the impairment loss and prepare a journal entry to record loss. c. What amount of depreciation expense would Zeibart record the 12 months from 7/1/2016 through 6/30/2017? Prepare a journal entry to record the depreciation expense. (no change in salvage)d. Using the financial statement effect template , show how the entries in part b & c affect Zeibart Company’s balance sheet and income statement.
Computing and Assessing Plant Asset Impairment
Zeibart Company purchased equipment for $225,000 on July 1, 2012, with an estimated useful life of 10 tears and expected salvage of $25,000. Straight line
a. Is the equipment impaired at 7/1/2016? Explain
b. If the equipment is impaired on 7/1/2016, compute the impairment loss and prepare a
c. What amount of depreciation expense would Zeibart record the 12 months from 7/1/2016 through 6/30/2017? Prepare a journal entry to record the depreciation expense. (no change in salvage)
d. Using the financial statement effect template , show how the entries in part b & c affect Zeibart Company’s balance sheet and income statement.
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