On December 31, 2022, Faital plc acquired a computer system from Plato Group by issuing a £600,000 zero-interest-bearing note, payable in full on December 31, 2026. Faital’s credit rating permits it to borrow funds from its several lines of credit at 10%. The computer is expected to have a 5-year life and a £70,000 residual value.
Instructions
a. Prepare the journal entry for the purchase on December 31, 2022.
b. Prepare any necessary adjusting entries relative to depreciation (use straight-line) and amortization on December 31, 2023.
c. Prepare any necessary adjusting entries relative to depreciation and amortization on December 31, 2024.
