Blue Company uses special strapping equipment in its packaging business. The equipment was purchased in January $2024$ for

$$12,200,000$ and had an estimated useful life of $8$ years with no salvage value. At December $31,2025,$ new technology was introduced

that would accelerate the obsolescence of Blue's equipment. Blue's controller estimates that expected future net cash flows on the

equipment will be $$7,686,000$ and that the fair value of the equipment is $$6,832,000.$ Blue intends to continue using the equipment,

but it is estimated that the remaining useful life is $4$ years. Blue uses straight$-$line depreciation.

$($a$)$

Prepare the journal entry $($if any$)$ to record the impairment at December $31,2025.($If no entry is required, select $"$No entry" for the

account titles and enter $O$ for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent

manually. List debit entry before credit entry.$)$

Date

Account Titles and Explanation

Debit

Credit

Dec. $31$