The following are independent scenarios.

Scenario A Kalua Inc. is a small manufacturing plant. All produced goods pass through one key piece of machinery that was purchased in 20X2 for $6 million. The machine is being depreciated using a variable charge method. Revenues have been relatively stable between 20X2 and 20X6. The plant manager has identified per a recent analysis that maintenance costs for the machine are rising and significantly exceed original estimates.

Scenario B Brown Inc. has two manufacturing plants, each one operating independently, and producing x-ray machines used in hospitals, clinics, dental practices, etc. Brown owns the land, building, and manufacturing machinery and equipment used at each plant location. The plants currently operate at full capacity and revenue growth is approximately 2% per year. It has come to Brown Inc.’s attention that technological advancement now allows the integration of x-ray technology into existing machinery and the stand-alone machines produced by Brown will be in less demand.

Scenario C Prary Farms grows three types of vegetables that are sold through various channels. Due to a sudden shortage in agricultural chemical pesticides in 20X3, Prary was forced to use an unfamiliar herbicide. The vegetables did not react well and the farm produced lower-quality vegetables as a result. In 20X3 Prary recorded a significant impairment loss. Supplier shortages continued through 20X4 and the company recorded an additional impairment loss. By the end of 20X5, pesticide suppliers had ramped up production and lowered prices to regain customers. Prary Farms was successfully able to secure sufficient amounts of the original chemical pesticide used for the following season.

Required:

1. Assess each independent scenario for indicators of impairment to determine if impairment testing is required. (You do not need to conduct the impairment test.)

2. How would Scenario C be handled differently if ASPE versus IFRS were adopted by the entity?