Reference no: EM13548838

United Parcel Service states in a recent 10-K report, we are the world's largest package delivery company and a leading global provider of specialized transportation and logistics services. The following note and data were reported:

Note 1-Summary of Accounting Policies

Impairment of Long-Lived Assets

We review long-lived assets for impairment when circumstances indicate the carrying amount of an asset may not be recoverable based on the undiscounted future cash flows of the asset. . . . In December (of a recent year), we permanently removed from service a number of Boeing 727 and DC-8 aircraft. As a result, we conducted an impairment evaluation, which resulted in. . . .

Dollars in Millions

Cost of property and equipment (beginning of year) ..................$25,361
Cost of property and equipment (end of year) ......................... 26,915
Capital expenditures during the year .................................... 1,947
Accumulated depreciation (beginning of year) ........................ 11,749
Accumulated depreciation (end of year) ............................... 13,007
Depreciation expense during the year ................................... 1,549
Cost of property and equipment sold during the year ................ 318
Accumulated depreciation on property sold ........................... 291
Cash received on property sold .......................................... 118

Required:

1. Reconstruct the journal entry for the disposal of property and equipment during the year.

2. Compute the amount of property and equipment that United Parcel wrote off as impaired during the year.