On 1 January 2016, A Ltd leased equipment to B Ltd. for a four-year period ending 31 December 2019, at which time possession of the leased asset will revert back to A Ltd. The cash price of the equipment is $365,760 and has an expected useful life of six years. The expected residual value of $25,000 at 31 December 2019, is not guaranteed. Equal payments under the lease are $100,000. The first payment was made on 1 January 2016, and subsequent payments due on 31 December of each year. Both companies have the accounting period ended at 31 December of each year. B Ltds incremental borrowing rate is 12%. B Ltd. knows the interest rate implicit in the lease payments is 10%. Both companies use straight-line depreciation method.

Required:

(c) Prepare the appropriate entries for B Ltd. on 31 December 2019, assuming the equipment is returned to A Ltd. and the actual residual value on the date is $1,500.

Please answer (c), thanks.