On December 31, 2019, Faital plc acquired a computer from Plato Group by issuing a £600,000 zero-interest-bearing note, payable in full on December 31, 2023. Faital Company'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, 2019.
b. Prepare any necessary adjusting entries relative to depreciation (use straight-line) and amortization on December 31, 2020.
c. Prepare any necessary adjusting entries relative to depreciation and amortization on December 31, 2021.