Rhino Corporation is a manufacturer of automobile parts. Its capital assets include specialized equipment that is being used in the finishing stage of its manufacturing process.

The equipment was purchased in $2020$ and is being depreciated using the units of production method. By December $31,2021,$ the book $($carrying$)$ value was $$430,000($after depreciation expense had been recorded$).$ However, at that time, Rhino became aware of new technology that would make the equipment obsolete within the next five years. An appraisal puts the equipment's future undiscounted net cash flows at $$390,000$ and its fair value at $$300,000.$ While considering its options for the eventual replacement, Rhino will continue using the equipment, but will change to straight$-$line depreciation.

Instructions

Assuming Rhino is a private Canadian corporation apply ASPE,

a$)$ Prepare the journal entry, if any, to record the impairment loss at December $31,2021.(4$ marks$)$

b$)$ Prepare the journal entries to record $2022$ and $2023$ depreciation. $(4$ marks$)$