On December 31, 2021, after a slight mishap, Wreckless Transport Co. decides to evaluate its delivery truck for possible impairment. The company has the following information as of 12-31-2021: Equipment cost 65,000 Accumulated depreciation to date 20,000 Expected future net cash flows 10,000 Fair Value on 12-31-2021 8,000 Disposal costs 2,000 Fair value of equipment on 12-31-2022 15,000 Assume that the company will continue to use this asset in the future. As of December 31, 2021, the equipment has a remaining useful life of 4 years. INSTRUCTIONS: A Prepare the journal entry, if any, to record impairment at 12-31-2021 B Prepare the journal entry, if any, at December 31, 2022 to record the increase in fair value. C Prepare the journal entry on 12-31-2021 to record impairment assuming that the company intends to dispose of the truck rather than continue to use it. Show work to explain please.
On December 31, 2021, after a slight mishap, Wreckless Transport Co. decides to evaluate its delivery truck for possible impairment. The company has the following information as of 12-31-2021: Equipment cost 65,000
INSTRUCTIONS: A Prepare the
B Prepare the journal entry, if any, at December 31, 2022 to record the increase in fair value.
C Prepare the journal entry on 12-31-2021 to record impairment assuming that the company intends to dispose of the truck rather than continue to use it.
Show work to explain please.
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