Prepare journal entries (in general journal form) to record the following.

1. The purchase of the assets.

2. The accrual of interest expense on the loan on 31 December 2015.

3. Depreciation expense for the year 2015.

4. The payment of the loan on 2 July 2016.

End of Chapter Problem 14.5 On 2 January 2015, Powerhouse Ltd purchased, by exchanging $282,000 cash and a $169,000, 12%, 18-month finance company loan, assets with the following independently determined appraised values: Appraised value $320,000 80,000 Building Land Machinery and equipment 100,000 $500,000 The estimated useful life of the building is 30 years and its residual value is $19,000. The $100,000 machinery and equipment amount consists of three machines independently valued at $31,000 each and some office equipment valued at $7,000. The estimated useful lives and residual values for these assets are: Useful life Residual value Machine 1 6 years $3,100 3,200 4,200 Machine 2 Machine 3 Office equipment 9 years 4 years 5 years 500 Powerhouse Ltd uses the straight-line depreciation method. Ignore GST