EcoPetroleum Ltd. owned the following unproved property as of the end of 2012.

Significant Leases		Insignificant Leases
Lease X	$450,000	Lease Y	$50,000
Lease Z	$400,000	Lease W	$35,000
Total	$850,000	Lease V	$25,000
		Lease U	$20,000
		Total	$130,000

Although no activity took place on Lease X during the year, EcoPetroleum decided that Lease X was not impaired because there were still two years left in that lease’s primary term. One dry hole was drilled on Lease Z during the year; but because EcoPetroleum intended to drill one more well on Lease Z in the coming year, it decided that Lease Z was only 55% impaired. With respect to the insignificant leases, past experience indicates that 75% of all unproved properties assessed on a group basis will eventually be abandoned. EcoPetroleum’s policy is to provide at year-end an allowance equal to 70% of the gross cost of these properties. The allowance account had a balance of $25,000 at year end. Give the entries to record impairment, and prepare the income statement and balance sheet.