Flounderrn Corporation uses special strapping equipment in its packaging business. The equipment was purchased in January 2019 for $10 million and had an estimated useful life of eight years with no residual value. In early April 2020, a part costing $875,000 and designed to increase the machinery's efficiency was added. The machine's estimated useful life did not change with this addition. By December 31, 2020, new technology had been introduced that would speed up the obsolescence of Flounderrnequipment. Flounderrncontroller estimates that expected undiscounted future net cash flows on the equipment would be $6.3 million, and that expected discounted future net cash flows on the equipment would be $5.8 million. Fair value of the equipment on December 31, 2020, was estimated to be $5.6 million. Flounderrnintends to continue using the equipment but estimates that its remaining useful life is now four years. Flounderrnuses straight-line depreciation. Assume that Flounderrnis a private company that follows ASPE.
 
INSTRUCTION:
a. Prepare the journal entry to record asset impairment on December 31, 2020, if any.
b. Fair value of the equipment on December 31, 2021, is estimated to be $5.9 million. Prepare  any journal entries for the equipment on December 31, 2021.
c. Repeat part (b), if on December 31, 2021, Flounderrnmanagement decides to dispose of the equipment. As of December 31, 2021, the asset is still in use and not ready for sale in its current state. In February 2022, Flounderrnmanagement will meet to outline an active program to find a buyer.
d. Repeat part (b), assuming that the equipment is designated as "held for sale" as of January 1, 2021, and that the equipment was not in use in 2021 but was still held by Flounderrnon December 31, 2021.
e. For each situation in parts (b), (c), and (d), indicate where the equipment will be reported on the December 31, 2021 balance sheet.
f. Repeat parts (a) and (b), assuming instead that Flounderrnis a public company that prepares financial statements in accordance with IFRS.
g. From the perspective of a financial statement user, discuss the importance of frequent impairment testing in producing relevant and faithfully representative financial statements. Do IFRS and ASPE differ in the required frequency? Explain briefly.