Entity A owns a motor van that was involved in an accident at the year-end of 2019. It 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 $3,600,000 and costs of disposal of $100,000 respectively.

On 1 January 2019, the carrying amount of the motor van was $8,000,000 and the van was estimated to have a remaining useful life of 8 years.

REQUIRED:

According to accounting standards, measure the amount of impairment loss of the motor van for the Year 2019 and prepare the relevant journal entries related to the impairment loss on 31 December 2019.

ACCOUNT NAMES 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:

The amount of impairment loss = $

Journal Entries:

Date	Account Name	Debit ($)	Credit ($)	Hints For Items If Necessary
31-Dec-19
				Judge Dr/Cr side.
				Judge Dr/Cr side.
				Judge Dr/Cr side.
				Judge Dr/Cr side.
				Judge Dr/Cr side