Computing and Assessing Plant Asset Impairment Zeibart Compa

Computing and Assessing Plant Asset Impairment

Zeibart Company purchases equipment for $235,000 on July 1, 2012, with an estimated useful life of 10 years and expected salvage value of $28,000. Straight-line depreciation is used. On July 1, 2016, economic factors cause the market value of the equipment to decline to $97,500. On this date, Zeibart examines the equipment for impairment and estimates $127,500 in future cash inflows related to use of this equipment.

a. Is the equipment impaired at July 1, 2016?
AnswerYesNo

b. Compute the impairment loss (if any) as of 7/1/2016 as well as the depreciation expense for the 12 months from July 1, 2016 to July 1, 2017. Round calculations to the nearest dollar.
Using the financial statement effects template, show how those two entries affect Zeibart Company’s balance sheet and income statement.

Balance Sheet
Transaction	Cash Asset	+	Noncash Assets	-	Contra Assets	=	Liabilities	+	Contrib. Capital	+	Earned Capital
b. Impairment charge	$Answer	+	$Answer	-	$Answer	=	$Answer	+	$Answer	+	$Answer
c. Depreciation expense	Answer	+	Answer	-	Answer	=	Answer	+	Answer	+	Answer


Revenue	-	Expenses	=	Net Income
$Answer	-	$Answer	=	$Answer
Answer	-	Answer	=	Answer

A) Yes Asset is impaired as on 1st July,2016.

Given,
Asset purchased on 1st July 2012		235000
Salvage Value				28000

Life of Asset				10years

Depreciation per year				20700

Vale of Asset as on 1st July, 2016		152200

Net Realisable Value of Asset			127500
Sale Value		127500
Or
Market Value		97500
Whichever is Higher i.e.	127500

Impairment Loss				24700

Depreciation Value for 1st July2016 - 2017		16583.33

Computing and Assessing Plant Asset Impairment Zeibart Company purchases equipment for $235,000 on July 1, 2012, with an estimated useful life of 10 years and e

Computing and Assessing Plant Asset Impairment Zeibart Compa

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