The information that follows relates to equipment owned by Waterway Limited at December 31, 2020:

Cost		$8,550,000
Accumulated depreciation to date		950,000
Expected future net cash flows (undiscounted)		6,650,000
Expected future net cash flows (discounted, value in use)		6,032,500
Fair value		5,890,000
Costs to sell (costs of disposal)		47,500

At December 31, 2020, Waterway 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 $47,500.

New attempt is in progress. Some of the new entries may impact the last attempt grading.Your answer is partially correct.

Assume that Waterway is a private company that follows ASPE. (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.)

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 equipments fair value (and recoverable amount) on this date is $6.18 million. Prepare the journal entry, if any, to record the increase in fair value. It is expected that the costs of disposal will total $47,500.
Repeat the requirements in (a) above assuming that Waterway is a public company that follows IFRS, and that the asset meets all criteria for classification as an asset held for sale. (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.)	Account Titles and Explanation	Debit	Credit
(1)	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
(2)	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
(3)	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount