Plastix inc bought a molding machine for 550000 on january

Reference no: EM13595067

Plastix Inc. bought a molding machine for $550,000 on January 1, 2011. The company expected to use this machine to extrude plastic toys for the next five (5) years, when the machine would be sold for $50,000. On December 31, 2012, their major customer, Tall-Mart, gave notification that they were terminating Plastix as a supplier. Plastix' accountants estimate that the machine will generate $300,000 in future cash inflows from other customers (undiscounted) and the fair value of the machine is $200,000. (Plastix uses straight-line depreciation)

a. Determine the book value of the machine as of 12/31/2012.

b. Determine whether the equipment is impaired as of 12/31/2012 and if impaired, compute the impairment loss for 2012.

Reference no: EM13595067

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