The problem under consideration involves five separate asset disposal transactions. Each transaction requires an explanation of its effect on the Statement of Comprehensive Income $($SCI$)$ and the Statement of Financial Position $($SFP$)\mathrm{.}1.$ Replacement of Old EquipmentProblem:The old equipment has been discontinued without identifying a likely buyer.Principle:Abandonment of an asset involves stopping its use permanently without reclassifying it as held for sale. Depreciation stops, and the asset is written down to the lower of its carrying value or recoverable value.Analysis: Carrying value: $$2,500,000$ Estimated realizable value: $$1,250,000$Accounting Treatment in SCI: Impairment loss of $$1,250,000$ should be recognized.Impact on Financial Statements: SCI: Impairment loss of $$1,250,000$ SFP: Decrease in equipment value by $$1,250,0002.$ Discontinued Use of BuildingProblem:SSI cannot sell or rent the building but may use it in the future. The building is $10$ years old and depreciated over $30$ years.Principle:Idle assets are those not currently in use but planned for future use and continue to be depreciated.Analysis: Cost: $$4,800,000$ Accumulated depreciation: $$1,600,000$ Carrying value: $$3,200,000$Accounting Treatment in SCI: Continue depreciating the building over its remaining useful life.Impact on Financial Statements: SCI: Depreciation expense continues SFP: No immediate change in carrying value$3.$ Replacement of Warehousing Conveyor SystemProblem:The old system is discontinued. Asking price is $$2,000,000,$ less than the fair value of $$2,500,000.$ Dismantling cost is $$250,000$Principle:To classify as "held for sale," the asset must be ready for immediate sale and at a reasonable price.Analysis: Carrying value: $$2,600,000$ Fair value less costs to sell: $$1,750,000$Accounting Treatment in SCI: Impairment loss of $$850,000$ should be recognized.Impact on Financial Statements: SCI: Impairment loss of $$850,000$ SFP: Decrease in equipment value by $$850,0004.$ Transfer of Assets to Irving Corp.Problem:SSI transfers assets to Irving Corp. but continues to invoice and collect sales.Principle:For a discontinued operation, proceeds must be recovered through a sale transaction, not continued use. This would not be classifies as held for sale.Analysis: Book value of assets: $$900,000$ Sale price: $$1,250,000$Accounting Treatment in SCI: No effectImpact on Financial Statements: No effect $5.$ Provision for Severance PayProblem:Severance pay for Eastern Canada Division employees is estimated at $$550,000.$Principle:To recognize liability as a constructive obligation, the company must publicly communicate the restructuring plan and take specific actions. Thus no liability is created.Analysis: Estimated severance pay: $$550,000$Accounting Treatment in SCI: No effectImpact on Financial Statements: No effectSummary TableEventIncome StatementStatement of Financial PositionReplacement of Production EquipmentImpairment loss: $$1,250,000$Decrease in equipment: $$1,250,000$Discontinuation of Small Building UseDepreciation expense continuesAccumulated depreciation increasesReplacement of Warehousing Conveyor SystemImpairment loss: $$850,000$Decrease in equipment: $$850,000$Transfer of Assets to Irving Corp.NO EFFECTNO EFFECTSeverance Pay for Eastern Canada DivisionNO EFFECTNO EFFECT These adjustments will provide a clearer financial picture of SSIs position and performance for the fiscal year $20$X$4,$ helping to inform managerial decisions and stakeholder understanding. Recommendations:$1.$ Seek professional appraisal services for accurate fair value estimations$\mathrm{.}2.$ Monitor potential uses for the small building to avoid prolonged carrying of underutilized assets$\mathrm{.}3.$ Communicate changes and their impact on financial statements to the bank to mitigate concerns about the credit line.