Hancock 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: Equipment under finance lease 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 P 1,600,000 and paid cash to complete the purchase. Required: Prepare journal entry to record the actual purchase of the equipment on the books Hancock Company.
Hancock 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: Equipment under finance lease 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 P 1,600,000 and paid cash to complete the purchase. Required: Prepare journal entry to record the actual purchase of the equipment on the books Hancock Company.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Hancock 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:
Equipment under finance lease 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 P 1,600,000 and paid cash to
complete the purchase.
Required:
Prepare journal entry to record the actual purchase of the equipment on the books Hancock Company.
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