Wilshire purchased equipment at the beginning of 20X0 for $11,000. Wilshire decided to depreciate the equipment over a 5-year period using the straight-line method. Wilshire estimated its residual value at $2,000. The estimated fair market value at the end of 20X0 was $10,000. Which of the following statements is correct concerning Wilshire’s financial statements at December 31, 20X1?