Entity 2 purchased a specialist machine from a US supplier on 1 January 2021. The trade price was $500,000. The machine was delivered on 1 February with a delivery charge of $2,500 applied by the US supplier. An import duty of 75,000 was levied by the HMRC. Entity 2 incurred a further 15,000 to install the machine in its Manchester factory. By 1 March 2021, the machine was fully operational. The machine has a useful economic life of 10 years with no residual value. A dismantling expense of 45,000 is expected to incur at the end of 2030. On 1 July 2021, the factory was temporary shut down due to the Covid restrictions and a shortage of staff. It was re-opened on 1 August 2021. Entity 2 paid the US supplier the full invoice amount of $502,500 on 1 March 2021. The following exchange rates are available: Dates $ to 1 1 January 2021 1.245 1 February 2021 1.327 1 March 2021 31 December 2021 1.298 1.276 Entity 2 has a cost of capital of 10% per annum. Depreciation is calculated on a monthly basis using the straight-line method. (c) Show clearly how the trade payables should be recognised initially and how the subsequent payment should be recorded. Explain how the foreign exchange difference should be accounted for in this case.