Computing and Assessing Plant Asset Impairment

Zeibart Company purchases equipment for 225000 on July 1 2012 with an estimated useful life of 10 years and expected salvage value of 25,000. Straight line depreciation is used. on July 1 2016 economic factors cause the fair value of the equipment to declined to 90,000. On this date zeibart examines the equipment for impairment and estimates 125000 in future cash inflows related to use of this equipment

a) is the equipment impaired at july 1 2016 explain

b) if the equipment is impaired on july 1 2016 compute the impairment loss and prepare a journal entry to record the loss

c) what amount of depreciation expense would zeibart record for the 12 months from july 1 2016 through june 30th 2017? prepare a journal entry to record this depreciation expense (no salvage charge)

d) using the financial statement effects template show how the entries in parts b and c affect zeibart company balance sheet and income statement