Whispering Winds Company uses special strapping equipment in its packaging business. The equipment was purchased in January 2019 for $10,500,000 and had an estimated useful life of 8 years with no salvage value. At December 31, 2020, new technology was introduced that would accelerate the obsolescence of Whispering Windss equipment. Whispering Windss controller estimates that expected future net cash flows on the equipment will be $6,562,500 and that the fair value of the equipment is $5,775,000. Whispering Winds intends to continue using the equipment, but it is estimated that the remaining useful life is 4 years. Whispering Winds uses straight-line depreciation.

Carrying Value: $7,875,000

The journal entry (if any) to record the impairment at December 31, 2020.

Loss on Impairment 2,100,000

Accumulated depreciation - equipment 2,100,000

1.) Prepare any journal entries for the equipment at December 31, 2021. The fair value of the equipment at December 31, 2021, is estimated to be $6,037,500.

2.) Prepare the journal entry (if any) to record the impairment at December 31, 2020. assuming that the company intends to dispose of the equipment and that it has not been disposed of as of December 31, 2021.