1. On 1 January 20X2, a company acquires computer software specific to a project for 200,000. Although the project is in its early stages and is not expected to make profits or positive cash flows for a number of years, the company will start to use the software straight away; it is estimated it has a useful life of 10 years. The company negotiated to defer the payment to the supplier until 1 January 20X4. The company currently pays interest on its borrowings at 6% per annum. Required (25 Marks):

Show how this transaction would be:

Journalized on 1 January 20X2; and Accounted for in the financial statements of the company for the year ended 31 December 20X2, assuming the present value of the 200,000 is 178,000.