Entity A owns a motor van that was involved in an accident at the year-end of 2020.

This motor van is barely useable, so the value in use is estimated at$1,500,000.However, the motor van is a common model and there is a demand for its parts.This results in the fair value of$3,600,000and costs of disposal of$100,000respectively.

On1 January 2020, the carrying amount of the motor van was$8,000,000and the van was estimated to have a remaining useful life of8 years.

REQUIRED:

According to the accounting standards, prepare the relevant journal entries related to the impairment loss on31 December 2020.

ACCOUNTS FOR INPUT:

| Plant | Motor van | Machine | Land | Building | Bank | Payable | Receivable | No entry |

| Retained earnings|Other income |Other expense |Interest expense | Interest revenue |

| Depreciation |Accum. depreciation | Impairment loss | Reversal of impairment loss |

| Restoration liability |Loss on disposal |Gain on disposal | Revaluation surplus | Revaluation deficit |

ANSWERS:

Journal Entries: