On January $1,$ Vale Inc. acquires equipment with a $10-$year useful life by issuing a two$-$year, zero$-$interest bearing installment note payable. The market rate is $14\%$ for similar transactions. Terms are $$11,200$ cash payment immediately plus payments of $$8,000$ cash at the end of each of the next two years. The company uses the effective interest method to amortize any discount on note payable and the straight$-$line method to record depreciation expense.

Required

a$.$ Prepare the entry to record the purchase of this equipment.

b$.$ Prepare the entry at the end of year one for $(1)$ interest accrual, $(2)$ cash payment, and $(3)$ depreciation expense.

c$.$ Prepare the entry at the end of year two for $(1)$ interest accrual, $(2)$ cash payment, and $(3)$ depreciation expense.

d$.$ Assume instead that Vale exchanged $160$ shares of its own $$1$ par common stock along with $$11,200$ cash for

the equipment. The stock was not actively traded, but the equipment was estimated to have a fair value at the date

of acquisition of $$25,600.$ Prepare the entry to record the purchase.