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Business E has a year-end of 29 February. On 1 March 2019, the business purchased a vehicle that was delivered on the same day. On
Business E has a year-end of 29 February. On 1 March 2019, the business purchased a vehicle that was delivered on the same day. On 29 February 2020, the business paid R284050 for the vehicle. This is longer than normal credit terms. Vehicles are measured on the cost model and are depreciated on the straight-line method. On 29 February 2020, the driver was involved in a minor accident. You have been provided with the following information at 29 February 2020: Useful life: 5 years Residual value R5000 Fair value: R185000 Costs to sell: R7500 Value in use: R165000 Market related interest rate: 15% The journal entry for the impairment of vehicles at 29 February 2020 is: A. DR Impairment expense 33600 CR Accumulated impairment 33600 B. DR Impairment expense 21100 CR Accumulated impairment 21100 C. DR Impairment expense 50740 CR Accumulated impairment 50740 D. DR Impairment expense 21100 CR PPE: Vehicles 21100 O E. No journal entry is necessary
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