Sheridan Company has a December 31 year end and uses straight-line depreciation for all property, plant, and equipment. On July 1, 2019, the company purchased equipment for $530,000. The equipment had an expected useful life of 10 years and no residual value. The company uses the nearest month method for partial year depreciation. On December 31, 2020, after recording annual depreciation, Sheridan reviewed its equipment for possible impairment. Sheridan determined that the equipment has a recoverable amount of $246,000. It is not known if the recoverable amount will increase or decrease in the future.

Prepare journal entries to record the purchase of the asset on July 1, 2019, and to record depreciation expense on December 31, 2019, and December 31, 2020.

Determine if there is an impairment loss at December 31, 2020. Calculate depreciation expense for 2021 and the carrying amount of the equipment at December 31, 2021.