Cobalt Plc Owns an Item of Machinery That Has a Cost

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) ?

A) $\begin{array}{l}01 \text { July } 2013\\\begin{array}{|c|l|r|r|}\hline & & & \\\hline \mathrm{Dr} & \text { Cash } & 533493 & \\\hline \mathrm{Dr} & \text { Accumulated depreciation-machine } & 200000 & \\\hline \mathrm{Cr} & \text { Machine } & & 700000 \\\hline \mathrm{Cr} & \text { Deferred gain } & & 33493 \\\hline\\\hline \text { Dr } & \text { Leased machine } & 533493 & \\\hline \mathrm{Cr} & \text { Lease liability } & & 533493\\\hline\\\hline 30 \text { June } 2014\\\hline & & & \\\hline \mathrm{Dr} & \text { Interest expense } & 53349 & \\\hline \mathrm{Dr} & \text { Lease liability } & 46651 & \\\hline \mathrm{Cr} & \text { Cash } & & 100000 \\\hline\\\hline \text { Dr } & \text { Amortisation of leased asset } & 66687 & \\\hline \text { Dr } & \text { Accumulated leased machine amortisation } & & 66687 \\\hline & & & \\\hline \mathrm{Dr} & \text { Deferred gain } & 4187 & \\\hline \mathrm{Cr} & \text { Profit on sale of leased asset } & & 4187 \\\hline\end{array}\end{array}$

B) $\begin{array}{l}01 \text { July } 2013\\\begin{array}{|c|l|r|r|}\hline & & & \\\hline \mathrm{Dr} & \text { Cash } & 533493 & \\\hline \mathrm{Dr} & \text { Accumulated depreciation-machine } & 200000 & \\\hline \mathrm{Cr} & \text { Machine } & & 700000 \\\hline \mathrm{Cr} & \text { Gain on sale of machine } & & 33493 \\\hline\\\hline30 \text { June } 2014\\\hline & & & \\\hline \mathrm{Dr} & \text { Rent expense } & 100000 & \\\hline \mathrm{Cr} & \text { Cash } & & 100000 \\\hline\end{array}\end{array}$

C) 01 July 2013
$\begin{array}{|l|l|r|r|}\hline \mathrm{Dr} & \text { Cash } & 533493 & \\\hline \mathrm{Dr} & \text { Accumulated depreciation-machine } & 200000 & \\\hline \mathrm{Cr} & \text { Machine } & & 700000 \\\hline \mathrm{Cr} & \text { Deferred gain } & & 33493\\\hline\end{array}$


$30 \text { June } 2014$
$\begin{array}{|r|l|r|r|}\hline & & & \\\hline \mathrm{Dr} & \text { Rent expense } & 100000 & \\\hline \mathrm{Cr} & \text { Cash } & & 100000 \\\hline & & & \\\hline \mathrm{Dr} & \text { Deferred gain } & 4187 & \\\hline \mathrm{Cr} & \text { Profit on sale of leased asset } & & 4187 \\\hline\end{array}$
D) $\begin{array}{l}01 \text { July } 2013\\\begin{array}{|l|l|r|r|}\hline & & & \\\hline \mathrm{Dr} & \text { Cash } & 533493 & \\\hline \mathrm{Dr} & \text { Accumulated depreciation-machine } & 200000 & \\\hline \mathrm{Cr} & \text { Machine } & & 700000 \\\hline \mathrm{Cr} & \text { Deferred gain } & & 33493\\\hline & & & \\\hline \mathrm{Dr} & \text { Leased machine } & 533493 & \\\hline \mathrm{Cr} & \text { Lease liability } & & 533493 \\\hline\\\hline30 \text { June } 2014\\\hline & & & \\\hline \mathrm{Dr} & \text { Rent expense } & 95813 & \\\hline \mathrm{Dr} & \text { Deferred gain } & 4187 & \\\hline \mathrm{Cr} & \text { Cash } & & 100000 \\\hline & & & \\\hline \mathrm{Dr} & \text { Amortisation of leased asset } & 66687 & \\\hline \mathrm{Dr} & \text { Accumulated leased machine amortisation } & & 66687 \\\hline\end{array}\end{array}$