Earth Oil Company acquired the following unexplored leases during 2018: Lease Acres Bonus/Acre 2,000 3,000 5,000 A $50 B 60 C 40 In acquiring and exploring thesesldises, Earth Oil Company incurred the following additional costs: Shooting rights.. Salaries for G&G exploration activities. Mapping costs for exploration activities Salary of in-house lawyer working on lease acquisition.. Minor repairs of G&G exploration equipment Salaries of landmen working on lease acquisition $ 8,000 40,000 10,000 10,000 500 ..... .... ... .. 30,000
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- 2. On Sept 30, 2020, ABC acquired a building to earn rent throughoperating leases. The investment property was initially measured atP20,000,000. It has an estimated useful life of 25 years and aresidual value of P400,000. It has a fair value of P22,000,000 andP23,000,000 as of the end of 2020 and 2021 respectively. Using the fair value model, what is the gain or (loss) fromchange in fair value in 2021?2. On Sept 30, 2020, ABC acquired a building to earn rent through operating leases. The investment property was initially measured at P20,000,000. It has an estimated useful life of 25 years and a residual value of P400,000. It has a fair value of P22,000,000 and P23,000,000 as of the end of 2020 and 2021 respectively. a. Using the fair value model, what is the carrying value on Dec. 31, 2020? b. Using the fair value model, what is the gain or (loss) from change in fair value?16.Entity D acquired a property in 2021 which contains mineral deposit. The acquisition cost of the property was P20,000,000. After acquisition, the following costs were incurred: Exploration cost P13,000,000; Development cost related to drilling wells P10,000,000; Development cost related to production equipment P15,000,000. For P2,000,000, the entity is legally required to restore the land to a condition appropriate for resale. It is estimated that the property can be sold for P5,000,000 following mineral extraction. Geological estimates indicate that 5,000,000 tons of mineral may be extracted. The entity extracted 600,000 tons of the mineral in 2021 and sold 450,000 tons. How much is the depletion included in the entity's inventory at Dec 31, 2021?
- 6.In Jan of 2018, Entity D purchased a patent at a cost of P200,000. Legal and filing fees of P50,000 were paid to acquire the patent. The entity estimated a 10-year useful life for the patent and uses the straight line amortization method for all intangible assets. In 2021, the entity spent P40,000 in legal fees for an unsuccessful defense of the patent. The amount charged to income (expense and loss) in 2021 related to the patent should be:On August 31, 2018, ABC purchased a building at P13,000,000 to earn rent income from operating leases. The entity incurred legal fees and transfer taxes of P500,000. The building has a residual value of P1,500,000 and an estimated useful life of 30 years. During the first year of acquisition, incurred operating costs of P2,000,000 but only earned rent income of P500,000. It was valued at P16,000,000 and P14,000,000 as of the end of 2018 and 2019. What is the carrying value of the investment property as of Dec. 31, 2018 using the cost model? With solution and good accounting form pls thank you!On August 31, 2018, ABC purchased a building at P13,000,000 to earn rent income from operating leases. The entity incurred legal fees and transfer taxes of P500,000. The building has a residual value of P1,500,000 and an estimated useful life of 30 years. During the first year of acquisition, incurred operating costs of P2,000,000 but only earned rent income of P500,000. It was valued at P16,000,000 and P14,000,000 as of the end of 2018 and 2019. a. What is the carrying value of the investment property as of Dec. 31, 2018 using the cost model? b. What is the gain/(loss) on change in fair value for the year 2019 if the entity uses the fair value model?
- On August 31, 2018, ABC purchased a building at P13,000,000 to earn rent income from operating leases. The entity incurred legal fees and transfer taxes of P500,000. The building has a residual value of P1,500,000 and an estimated useful life of 30 years. During the first year of acquisition, incurred operating costs of P2,000,000 but only earned rent income of P500,000. It was valued at P16,000,000 and P14,000,000 as of the end of 2018 and 2019. What is the carrying value of the investment property as of Dec. 31, 2018 using the cost model? And What is the gain/(loss) on change in fair value for the year 2019 if the entity uses the fair value model?On August 31, 2018, ABC purchased a building at P13,000,000 to earn rent income from operating leases. The entity incurred legal fees and transfer taxes of P500,000. The building has a residual value of P1,500,000 and an estimated useful life of 30 years. During the first year of acquisition, incurred operating costs of P2,000,000 but only earned rent income of P500,000. It was valued at P16,000,000 and P14,000,000 as of the end of 2018 and 2019. What is the carrying value of the investment property as of Dec. 31, 2018 using the cost model? What is the gain/(loss) on change in fair value for the year 2019 if the entity uses the fair value model? Solutions must be explained step by step.On August 31, 2018, ABC purchased a building at P13,000,000 to earn rent income from operating leases. The entity incurred legal fees and transfer taxes of P500,000. The building has a residual value of P1,500,000 and an estimated useful life of 30 years. During the first year of acquisition, incurred operating costs of P2,000,000 but only earned rent income of P500,000. It was valued at P16,000,000 and P14,000,000 as of the end of 2018 and 2019. Present the solution in good accounting form. A. What is the carrying value of the investment property as of Dec. 31, 2018 using the cost model? B. What is the gain/(loss) on change in fair value for the year 2019 if the entity uses the fair value model?
- Hancock Company leased many assets and capitalized most of the leased assets. On December 31, 2020, the entity had the following balances in relation to a piece of specialized equipment: Equipment under finance lease 4,000,000 Accumulated depreciation 2,465,000 Lease liability 1,300,000 Depreciation has been recorded up to end of the year, and no accrued interest is involved. On December 31, 2020, the entity decided to purchase the equipment for P 1,600,000 and paid cash to complete the purchase. Required: Prepare journal entry to record the actual purchase of the equipment on the books Hancock Company.On December 1, 20x1, PRC Co acquired all the identifiable assets and liabilities ofBOA Co for P3,000,000. BOA's net identifiable assets were valued at P2,180,000.This amount included a provisional amount of P150,000 assigned to the patent towhich the fair value is not readily determinable. BOA tentatively amortized the patentover 5 years using a straight-line method in 20x1. On July 1, 20x2, an independentappraiser determined that the patent's fair value on the acquisition date wasP70,000, and the remaining useful life as of that date is 3 years. Additionally, onSeptember 1, 20x2, the stock market crashed due to a pandemic. Various tradingsecurities acquired from BOA with an acquisition date fair value of P400,000 nowhave a fair value only of P120,000. How much should be the amount of adjustmentsto restate the goodwill?Assume El Dorado Inc. buys a competitor’s assets for $900,000. Of the $900,000 acquisition price, $600,000 is allocated to Section 197 Intangible Assets as follows: Customer Lists $60,000 Trade Name $90,000 Non-Compete Covenant 80,000 Patent $120,000 Goodwill $250,000 What is El Dorado’s accumulated amortization and remaining basis in each of its Section 197 Intangibles after 3 years? Use a table to present your answer.