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.

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter14: Property Transact Ions: Capital Gains And Losses, § 1231, And Recapture Provisions

Section: Chapter Questions

Problem 75P

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