E11.23 (LO 6, 7, 8) (ImpairmentCost Recovery and Rational Entity Models) Assume the same information as in E11.22, except that at December 31, 2020, Gaurav 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 $50,000.

Instructions a. Assume that Gaurav is a private company that follows ASPE.

1. Prepare the journal entry at December 31, 2020, to record asset impairment, if any. 2. Prepare the journal 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 $6.5 million. Prepare the journal entry, if any, to record the increase in fair value. It is expected that the costs of disposal will total $50,000. 4. Identify where, and at what amount, the asset will be reported on the December 31, 2021 statement of financial position. b. Repeat the requirements in part (a) above assuming that Gaurav is a public company that follows IFRS, and that the asset meets all criteria for classification as an asset held for sale.