Necessary adjusting entries relative to depreciation

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On December 31, 2010, faital company accuired a computer from Plato Corporation by issuing a $600,000 zero interest baring note, payble in full on December 31, 2014. Faital company's credit ratings permits it to borrow funds from its several lines of credit at 10%. THe computer is expected to have a 5-year life and a $70,000 salvage value.

A. Prepare the journal entry for the purchase on December 31, 2010.

B. Prepare any necessary adjusting entries relative to depreciation(use straight line) and amortization (use effective interest method) on December 31,2011.

C. Prepare necessary adjusting entries relative to depreciation and amortization on December 31, 2012.

Reference no: EM13147422

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