SheffieldCorp., a December 31 year-end company that applies IFRS, acquired an investment of1,300shares of Credence Corp. in mid-2016 for $37,600. Between significant volatility in the markets and in the business prospects of Credence Corp., the accounting for this investment presented a challenge toSheffield. Toward the end of 2020, Credence discontinued the small annual dividend of $0.50per share that it had been paying and announced that a major patent responsible for 50% of its income had lost most of its value due to a technological improvement by a competitor.

Situation 1:Credence Corp. is a publicly traded company on the Toronto Stock Exchange, andSheffieldhas opted to account for its investment at FV-NI. By the end of 2019, the price of Credence shares had fallen to $26.50per share from $29the previous year, and by the end of 2020 they were trading at $11.10.

Situation 2:Credence Corp. is a private enterprise owned by a group of 20 investors and is a supplier of materials toSheffield.Sheffieldpurchased the shares to cement the relationship between the two companies and has opted to account for its investment at FV-OCI. In late 2019,Sheffieldwas beginning to worry about its investment and determined that its value had probably fallen marginally to an estimated fair value of approximately $33,000from $34,000the previous year. In 2020,Sheffieldwas more concerned and, at year end, carried out a thorough analysis of the present value of the likely cash flows to be derived from this investment and estimated an amount of $15,600.

SheffieldCorp. adjusts the carrying amount of its investments directly when recognizing an impairment loss, and each type of investment income is accounted for and reported separately.

For each situation, identify the impairment model thatSheffieldshould apply.

Situation 1Sheffieldshould apply the

Fair Value Impairment Model

Expected Loss Model

Incurred Loss Model

Situation 2Sheffieldshould apply the

Fair Value Impairment Model

Expected Loss Model

Incurred Loss Model

the appropriate journal entries at December 31, 2019, and December 31, 2020, under situation 1.(Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

Dec. 31, 2019

Dec. 31, 2020

the appropriate journal entries at December 31, 2019, and December 31, 2020, under situation 2.(Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

Dec. 31, 2019

Dec. 31, 2020

AssumingSheffieldis a private company that applies ASPE, prepare the appropriate journal entries at December 31, 2019, and December 31, 2020, under situation 1.(Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

Dec. 31, 2019

Dec. 31, 2020