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Cobalt Plc Owns an Item of Machinery That Has a Cost

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Cobalt Plc owns an item of machinery that has a cost of €700 000 and accumulated depreciation of €200 000 as at 1 July 2013.On that date the machine is sold to Blue Plc for $533 493,and then leased back over 8 years (the remaining life of the machine) .The lease is non-cancellable.The lease payments are €100 000 per annum,payable in arrears on 30 June each year.The interest rate implicit in the lease is 10% and the economic benefits of the asset are expected to be realised evenly over its life.What are the entries to record the transactions in Cobalt's books on 1 July 2013 and 30 June 2014 (rounded to the nearest euro) ?


Definitions:

Alkyl Halides

Organic compounds containing a halogen atom bonded to an alkyl group, used in various chemical reactions and as intermediates in organic synthesis.

Hot Methanol

Methanol used at an elevated temperature in chemical reactions or extraction processes.

Major Organic Product

The primary chemical compound formed in the largest quantity from an organic reaction.

Leaving Group

An atom or group of atoms that detaches from the parent molecule in a chemical reaction, often helping to facilitate the reaction.

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