Presented below is information related to equipment owned by Marigold Company at December 31, 2020. Cost $7,000,000 Accumulated depreciation to date 800,000 Expected future net cash flows 5,000,000 Fair value 3,400,000 Assume that Marigold will continue to use this asset in the future. As of December 31, 2020, the equipment has a remaining useful life of 4 years.

1. For Marigold company, the recoverability test compares $_________ to $______. As a result, the asset fails the recoverability test, because the expected future net cash flows is/are less than the book value of the asset so a loss on impairment is recorded in 2020.