The information that follows relates to equipment owned by Coronado Limited at December 31, 2020: Cost

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The information that follows relates to equipment owned by Coronado Limited at December 31, 2020:

Cost. $9,450,000

Accumulated depreciation to date 1,050,000

Expected future net cash flows (undiscounted). 7,350,000

Expected future net cash flows (discounted, value in use) 6,667,500

Fair value 6,510,000

Costs to sell (costs of disposal) 52,500

At December 31, 2020, Coronado discontinues use of the equipment and intends to dispose of it in the coming year by selling it to a competitor. It is expected that the costs of disposal will total $52,500.

a)

Assume that Coronado is a private company that follows ASPE. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. if no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

1. Prepare thejournal entry at December 31, 2020, to record asset impairment, if any.

2. Prepare thejournal entry to record depreciation expense for 2021.

3. Assume that the asset was not sold by December 31, 2021. The equipment's fair value (and recoverable amount) on this date is $6.83 million. Prepare the journal entry, if any, to record the increase in fair value. It is expected that the costs of disposal will total $52,500. No. Account Titles and Explanation Debit Credit (1) Accumulated Impairment Losses - Equipment | 1732500 Equipment | 1732500 (2) Depreciation Expense | 666750 Accumulated Depreciation - Equipment 666750 (3) Equipment 776750 Revaluation Surplus (OCI) 776750

b.

Repeat the requirements in (a) above assuming that Coronado is a public company that follows IFRS, and that the asset meets all criteria for classi?cation as an asset held for sale. {Credit account titles are automatically indented when the amount is entered. Do not indent manually. if no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit (1) Loss on Impairment l I 1942500 Equipment 1942500 (2) No Entry I I 0 No Entry 0 (3) Equipment l I 320000 Revaluation Surplus (OCI) 320000