Super Computers Inc. (SCI) is a publicly accountable enterprise that manufactures computer microchips. It is conducting various impairment tests in concert with the preparation of its financial statements for the year ended December 31, 2016. Management is concerned that due to the recent introduction of more mechanized production equipment, it is possible that the value of one of SCI’s machines is impaired. SCI uses the cost model to account for the machine and is depreciating it on a straight-line basis over four years.

Other relevant information follows:

Original cost ........................................................................ $2,400,000
Accumulated depreciation ................................................     600,000
Estimated residual value ...................................................                  0
Fair value – December 31, 2016 .......................................   1,400,000
Costs to sell .........................................................................          50,000
Incremental cash flow 2017 ..............................................      550,000
Incremental cash flow 2018 ..............................................      550,000
Incremental cash flow 2019 ..............................................      550,000
Incremental cash flow 2020 and later .............................                  0
Risk-adjusted cost of capital .............................................               9%

Required:
a. Determine whether the asset is impaired, and if so prepare the journal entry.
b. Management determined that the fair value less costs to sell off the machine as at December 31, 2017, was $975,000. Prepare the required journal entry, if any.