Double entry for impairment to an asset?

Raging Pineapples

This isn't for a client, but just for my own personal curiosity.

If a small business had a company vehicle which was accounted for in the normal way, and that vehicle suffered some kind of damage (perhaps someone keyed it and the business hadn't the funds to repair it, or it was found out that it would need an entirely new exhaust system in 10,000 miles). Would you need to account for that in the books so that you were showing a true and fair value of the asset on the balance sheet, or ignore it?

So perhaps a vehicle may have been purchased for 10,000, have accumulated depreciation of 5,500, with a net book value of 4,500. At its service, it is found to have a serious mechanical problem which reduces the van's realisable sale value to 2,500.

What would you dooooo? >>stares inquisitively, and somewhat mysteriously. With a twitch<<

wildgoose1uk

A new exhaust system is just wear and tear so I doubt you woud want to write down the value of an asset on that basis.

Again with the keying, if the vehicle originally cost £10 and was not valued at £5.5k I doubt it would make a material difference to the asset value. Might make it more difficult to sell though!