In a recent 10-K report, United Presents Service states it “is the world’s largest package delivery company, a leader in the U.S. less-than-truckload industry, and the premier provider of global supply chain management solutions.” The following note and data were reported:NOTE 1—SUMMARY OF ACCOUNTING POLICIESProperty, Plant and EquipmentWe review long-lived assets for impairment when circumstances indicate the carrying amount of an asset may not be recoverable based on the undiscounted future cash flows. If the carrying amount of the asset is determined not to be recoverable, a write-down to fair value is recorded. Fair values are determined based on quoted market values, discounted cash flows, or external appraisals, as appropriate. Dollars in MillionsCost of property and equipment (beginning of year)$ 54,524Cost of property and equipment (end of year)59,736Capital expenditures during the year6,410Accumulated depreciation (beginning of year)27,936Accumulated depreciation (end of year)29,260Depreciation expense during the year2,390Cost of property and equipment sold during the year1,198Accumulated depreciation on property sold1,066Cash received on property sold80Required:Reconstruct the journal entry for the disposal of property and equipment during the year.Compute the amount of property and equipment that United Presents wrote off as impaired during the year, if any. (Hint: Set up T-accounts.) Complete this question by entering your answers in the tabs Below.Required 1 Required 2Reconstruct the journal entry for the disposal of property and equipment during the year.Note: If no entry is required for a transaction/event, select "No journal entry required" in the firsmillions (i.e., 10,000,000 should be entered as 10).View transaction listJournal entry worksheet1Record the disposal of property and equipment during the year.Note: Enter debits before credits.TransactionaCashGeneral JournalDebitCredit80Accumulated depreciationLoss on sale of property and equipmentProperty and equipment1,198>

To reconstruct the journal entry for the disposal of property and equipment during the year, we need…

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Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter7: Operating Assets

Section: Chapter Questions

Problem 80.3C

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Question

In a recent 10-K report, United Presents Service states it “is the world’s largest package delivery company, a leader in the U.S. less-than-truckload industry, and the premier provider of global supply chain management solutions.” The following note and data were reported:

NOTE 1—SUMMARY OF ACCOUNTING POLICIES

Property, Plant and Equipment

We review long-lived assets for impairment when circumstances indicate the carrying amount of an asset may not be recoverable based on the undiscounted future cash flows. If the carrying amount of the asset is determined not to be recoverable, a write-down to fair value is recorded. Fair values are determined based on quoted market values, discounted cash flows, or external appraisals, as appropriate.

	Dollars in Millions
Cost of property and equipment (beginning of year)	$ 54,524
Cost of property and equipment (end of year)	59,736
Capital expenditures during the year	6,410
Accumulated depreciation (beginning of year)	27,936
Accumulated depreciation (end of year)	29,260
Depreciation expense during the year	2,390
Cost of property and equipment sold during the year	1,198
Accumulated depreciation on property sold	1,066
Cash received on property sold	80

Required:

Reconstruct the journal entry for the disposal of property and equipment during the year.
Compute the amount of property and equipment that United Presents wrote off as impaired during the year, if any. (Hint: Set up T-accounts.)