On 2 January 2015, Powerhouse Ltd purchased, by exchanging $300 000 cash and a $180 000, 12%, 18-month finance company loan, assets with the following independently determined appraised values:

	Appraised value
Building Land Machinery and equipment	$	320 000 80 000 100 000
	$	500 000

The estimated useful life of the building is 30 years and its residual value is $20000.

The $100 000 machinery and equipment amount consists of three machines independently valued at $30 000 each and some office equipment valued at $10 000. The estimated useful lives and residual values for these assets are:

	Useful life		Residual value
Machine 1 Machine 2 Machine 3 Office equipment	6 years 9 years 4 years 5 years		$3 000 3 000 4 000 500

Powerhouse Ltd uses the straight-line depreciation method. Ignore GST.

Required

A. Prepare journal entries(in general journal form) to record:

1. The purchase of the assets

2. The accrual of interest expense on the loan on 31 December 2015.

3 .Depreciation expense for the year 2015.

4. The payment of the loan on 2 July 2016.

B. Show how the assets would be reported on the 31 December 2015 balance sheet.