Part A (6 marks) Wong Incorporated has a machine that processes and packages tuna in oil. The machine originally cost $100,000 and is being amortized on a straight-line basis over 20 years. The carrying amount of the machine on December 31, 2021, is $25,000. Recent health studies have shown that due to contamination, eating tuna is bad for your health. Undiscounted cash flows for the machine are $22,000. Discounted cash flows (value in use) for the machine are $19,500. The fair value of the machine is $20,000 and disposal costs are estimated to be $1,500.

Required:

Case A. Assume that Wong Inc. is a public corporation, following IFRS.

1. Is the machine impaired on December 31, 2021? Briefly explain. (2 marks) ___________________________________________________________________

2. Provide the journal entry to record the impairment loss, if any (2 marks)

	Debit	Credit

Case B. Assume that Wong Inc. is a private corporation, following ASPE.

1. Is the machine impaired on December 31, 2021? (1 mark) _______________________

2. Compute the impairment loss if any (1 mark)________________________

Part B (4 marks)

Elora Inc. owns equipment that it purchased on January 1, 2019, for $100,000. The machine has a ten-year useful life and no residual value. The straight-line depreciation is being used.

The company uses the revaluation model to account for its property, plant, and equipment every two years. On the revaluation date, at December 31, 2020, the machine has a fair value of $88,000.

Required: Using the revaluation model, prepare the entr(ies) to adjust the asset's carrying amount to fair value. You can use either the asset adjustment method or the proportionate method.

	Debit	Credit