On December 31, 2010, Faital Company acquired a computer from Plato Corporation by issuing a $600,000 zero-interest-bearing note, payable in full on December 31, 2014. Faital Co. credit rating 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 Dec. 31, 2010
b) Prepare any necessary adjusting entries relative to depreciation (use straight line) and amortization (use effective interest method) on Dec. 31, 2011.
c) Prepare any necessary adjusting entries relative to depreciation and amortization on Dec. 31, 2012.