On 1 July 2022, Point Lookout Ltd acquired a boat to use in its surfing holidays business. Point Lookout Ltd paid an initial amount of $250 000 on the date of acquisition and agreed to make a further five annual payments of $300 000, starting on 30 June 2023. Point Lookout Ltd can borrow funds at 8 per cent per annum.

REQUIRED

Prepare the journal entries as at 1 July 2022 and 30 June 2023 to account for the acquisition of the asset.