The accountant of Ryutaro Limited, a car company, noted the following item in a report to the finance controller on the draft accounts for the year ended December 31, 2021: • A motor vehicle originally purchased for $120,000 in 2017 was being depreciated over ten years with an expected scrap value of $20,000. However, due to major complaints and poor road performance earlier this year about the vehicle, it is now expected that the vehicle will only be commercially viable for another year, and it will have no scrap value. Answer the following questions: I. Discuss the appropriate accounting treatment for the above. II. Assuming the books are closed for 2020 and open for 2021, provide the journal entries required to address the change. Ignore income tax effects.Show workings
The accountant of Ryutaro Limited, a car company, noted the following item in a report to the finance controller on the draft accounts for the year ended December 31, 2021:
• A motor vehicle originally purchased for $120,000 in 2017 was being
this year about the vehicle, it is now expected that the vehicle will only be commercially viable for another year, and it will have no scrap value.
Answer the following questions:
I. Discuss the appropriate accounting treatment for the above.
II. Assuming the books are closed for 2020 and open for 2021, provide the
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