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The information that follows relates to equipment owned by Headlands Limited at December 31, 2020: Cost $7,740,000 Accumulated depreciation to date 860,000 Expected future net cash flows (undiscounted) 6,020,000 Expected future net cash flows (discounted, value in use) 5,461,000 Fair value 5,332,000 Costs to sell (costs of disposal) 43,000 Assume that Headlands will continue to use this asset in the future. As at December 31, 2020, the equipment has a remaining useful life of four years. Headlands uses the straight-line method of depreciation. Assume that Headlands is a private company that follows ASPE. 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. The equipment's fair value at December 31, 2021 is $5.59 million. Prepare the journal entry, if any, to record the increase in fair value. (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 O for the amounts.) No. Date Account Titles and Explanation Debit Credit (2) December 31, 2021 (3) December 31, 2021 List of Accounts Repeat the requirements in (a) above assuming that Headlands is a public company that follows IFRS. (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 Ofor the amounts.) No. Date Account Titles and Explanation Debit Credit (1) December 31, 2020 (2) December 31, 2021 (3) December 31, 2021

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