On December 31, 2022, an entity replaced the substandard chairs on one of its buses used in its transportation services. The original cost of the replaced chairs is P 1,000,000 and accumulated depreciation of P 400,000. There were no proceeds received in the retirement of the replaced chairs while the cost of replacement chairs is P 1,400,000.

Required:

Determine the accounting for replacement.

Prepare the journal entries.