On January 2, 2019, Reindeer Consulting bought equipment on account for $450,000 to install in a leased building.Reindeer Consulting is legally required by the building lease to remove the equipment at the end of 8 years.The estimated cost of removal is $65,000.The interest rate reflective of risk in this situation is 7%.

Required:

Round your answers to the nearest dollar.

1. Prepare the entries to record the purchase of the equipment and the decommissioning obligation at the beginning of 2019
2. Prepare the adjusting entries on December 31, 2019 and 2020. Assume straight line depreciation and no salvage value.