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Prepare journal entry to record the actual purchase

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Question - Macedon Company leased many assets and capitalized most of the leased assets. On December 31, 2020, the entity had the following balances in relation to a piece of specialized equipment:

Right of use asset 4,000,000

Accumulated depreciation 2,465,000

Lease liability 1,300,000

Depreciation has been recorded up to end of the year, and no accrued interest is involved.

On December 31, 2020, the entity decided to purchase the equipment for P1,600,000 and paid cash to complete the purchase.

Required -

1. Prepare journal entry to record the actual purchase of the equipment on the books Macedon Company. (With Explanation).

2. Prepare journal entries for 2020. (With Explanation).

Reference no: EM132961702

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