REQUIRED: On January $1,20$Y$1,$ Martin Manufacturing paid cash for a new piece of manufacturing equipment. The machine cost $$40,000$ and had an estimated useful life of $5$ years with a $$5,000$ salvage value. Martin uses the double$-$declining balance method of depreciation.

During $20$Y$2,$ brand new technology was developed in Martin's industry. If Martin does not adjust, it will lose sales, as the new technology enables its competitors to produce a higher quality product using less time and materials. This development triggered an impairment analysis of Martin's existing machinery at the end of the year. $20$Y$2$ depreciation had already been recorded by the time of the analysis. The manufacturing equipment purchased in $20$Y$1$ now has an expected future cash flow of $$12,000$ and a fair market value of $$2,000.$

Show how the above transactions would impact $20$Y$1-20$Y$2$ cash flow, earnings, and balance sheet elements for Martin