1. Medrano is the defendant in a lawsuit filed by Witt in 2018 disputing the validity of copyright held by Tone. December 31, 2018, Tone determined that Witt would probably be successful for an estimated amount of $400, 000. Appropriately, a $400, 000 loss was accrued by a charge to income for the year ended December 31, 2018. On December 31, 2019, Tone and Witt agreed to a settlement providing for a cash payment of $250, 000 by Tone to Witt, and transfer of Tone’s copyright to Witt. The carrying amount of the copyright on tone’s accounting records was $60, 000 on December 31, 2019. What would be the effect of the settlement on Tone’s income before tax in 2019? 2. On December 31, 20x2, Apostol determines an indication that the impairment loss recognized in the prior period may no longer exist. The revised recoverable amount of the building on December 31, 20x2 is $1,280,000. If no impairment loss had been recognized in the prior period, the carrying amount of the building on December 31, 20x2 would have been $1,200,000. How much is the gain on reversal of impairment on December 31, 20x2? 3. On January 1, 2019, Hipolito Corporation issued 5,000 of its 5 years, $1,000 face value, 11% bonds dated January 1 in an effective annual interest of 9%. Interest is payable each December 31. Perez uses an effective interest method of amortization. On December 31, 2020, the $3,000 bonds were extinguished early through acquisition in the open market by Perez for $2,970,000 plus accrues interest. How much is the gain on early retirement of bonds on December 31, 2020?
1. Medrano is the defendant in a lawsuit filed by Witt in 2018 disputing the validity of copyright held by Tone. December 31, 2018, Tone determined that Witt would probably be successful for an estimated amount of $400, 000. Appropriately, a $400, 000 loss was accrued by a charge to income for the year ended December 31, 2018. On December 31, 2019, Tone and Witt agreed to a settlement providing for a cash payment of $250, 000 by Tone to Witt, and transfer of Tone’s copyright to Witt. The carrying amount of the copyright on tone’s accounting records was $60, 000 on December 31, 2019. What would be the effect of the settlement on Tone’s income before tax in 2019?
2. On December 31, 20x2, Apostol determines an indication that the impairment loss recognized in the prior period may no longer exist. The revised recoverable amount of the building on December 31, 20x2 is $1,280,000. If no impairment loss had been recognized in the prior period, the carrying amount of the building on December 31, 20x2 would have been $1,200,000. How much is the gain on reversal of impairment on December 31, 20x2?
3. On January 1, 2019, Hipolito Corporation issued 5,000 of its 5 years, $1,000 face
How much is the gain on early retirement of bonds on December 31, 2020?
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