For each of the above independent scenarios, prepare the journal entry necessary to record the transaction, assuming that Riverbed follows IFRS
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Riverbed is a cologne retailer. During 2020, Riverbed had the following non-monetary transactions.
Scenario 1: Riverbed exchanged 4,500 of its common shares (FMV of $9 each) for equipment with a FMV of $45,000.
Scenario 2: Riverbed traded machinery with a cost of $14,700 and
For each of the above independent scenarios, prepare the
Hint: Scenario 1: 2 entries
Scenario 2: 5 entries
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Solved in 3 steps
- Buchanan Imports purchased McLaren Corporation for $5,000,000 cash when McLaren had net assets worth $4,500,000. A. What is the amount of goodwill in this transaction? B. What is Buchanans journal entry to record the purchase of McLaren? C. What journal entry should Buchanan write when the company internally generates additional goodwill in the year following the purchase of McLaren?On May 1, 2015, Zoe Inc. purchased Branta Corp. for $15,000,000 in cash. They only received $12,000,000 in net assets. In 2016, the market value of the goodwill obtained from Branta Corp. was valued at $4,000,000, but in 2017 it dropped to $2,000,000. Prepare the journal entry for the creation of goodwill and the entry to record any impairments to it in subsequent years.In 2020, HP Company transferred goods to a retailer on consignment. The goods cost P450,000 and normally are sold at a 40% markup on cost. GGG paid P5,000 for the cost of the shipment while the retailer paid P3,800 for advertising and P2,800 for the cost of freight out. The parties agreed that GGG would reimburse the cost of advertising and freight paid by the retailer. In 2020, the retailer at the normal markup, sold 80% of the merchandise and the balance of the merchandise was returned to AAA and paid a freight of P2,500. The retailer withheld 15% commission from payment plus the amount reimbursable by the consignor. How much is the consignment net income?
- n 2020, Staged Home Ltd. completed the following transactions involving delivery trucks: July 5 Traded in an old truck and paid $19,600 in cash for furniture. The accounting records on July 5 showed the cost of the old truck at $43,500 and related accumulated depreciation of $7,250. The furniture was estimated to have a six-year life and a $8,268 trade-in value. The invoice for the exchange showed these items: Price of the furniture (equal to its fair value) $ 50,100 Trade-in allowance (30,500 ) Total paid in cash $ 19,600 Dec. 31 Recorded straight-line depreciation on the furniture (to nearest whole month). Required:Prepare journal entries to record the transactions. 1) Record the exchange 2) Record the depreciationBarra Inc. sells machinery to GM Corp. under an arrangement where GM prepays for the equipment on January 1, 2022 and the equipment is delivered on June 30, 2022. When delivery of the machinery occurs, Barra will record which of the following: Increase to inventory. Increase to cash. Increase to unearned revenue. None of the answers are correct. Increase to sales revenue.On October 1, 2017, the Puppy Eyes Company acquired the net assets of The Cat Love Company when the fair value of Cat Love’s net assets was P116 million and their carrying amount was P120 million. The consideration transferred comprised P200 million in cash transferred at acquisition date, plus another P60 million in cash to be transferred 11 months after the acquisition date if a specified profit target being met by Cat Love. At the acquisition date there was only a low probability of the profit target being met, so the fair value of the additional consideration liability was P10 million. In the event the profit target was met and the P60 million cash was transferred, what amount should Puppy Eyes present for Goodwill in its statement of Financial position on December 31, 2017, according to IFRS 3 Business Combinations? Group of answer choices 84 million 144 million 94 million 140 million
- Yellow Company, a distributor of machinery, bought a machine from the manufacturer in November 2020 for P500,000. On December 30, 2020, the entity sold this machine for P750,000 under the following terms: 2% discount if paid within 30 days, 1% discount if paid after 30 days, or payabl e in full within ninetydays if not paid within the discount periods. However, the customer had the right to return this machine to Yellow Company if it was unable to resell the machine before the expiration of the ninety-day payment period, in which case the customer’s obligation to Yellow Company would be canceled. In the net sales for the year ended december 31,2020, what amount should be included for the sale of the machine? a. 750,000 b. 735,000 c. 742,500 d. 0In October, Dean Company exchanged an old packing machine costing P240,000 and 50% depreciated, for a dissimilar used machine and paid a cash difference of P32,000. The market value of the old packaging machine was determined to be P140,000. How much is the cost of the newly acquired machine and the amount of gain or loss, respectively, that Dean should record on this exchange?On July 1, 2020, Hedwig Emporiums purchased Nargle Enterprises by paying $300,000 cash and issuing $200,000 note payable to Luna Lovely. At July 1, 2020, the balance sheet of Nargle Enterprises was as follows: A/R $50,000 Inventory $110,000 Land $45,000 Buildings (net) $80,000 Equipment (net) $65,000 Trademarks $5,000 Accounts Payable $200,000 Equity $155,000 The recorded amounts all approximate current values except for land (undervalued $10,000), inventory (overvalued $10,000) and trademarks (fair value $30,000). Assume the note was issued at par value. Prepare the July 1 entry to record purchase of Nargle Enterprises Prepare the December 31 entry to record amortization of Trademarks assuming a 5 year usual life
- On July 1, 2020, Martinez Corporation purchased Young Company by paying $259,000 cash and issuing a $128,000 note payable to Steve Young. At July 1, 2020, the balance sheet of Young Company was as follows. Cash $50,400 Accounts payable $206,000 Accounts receivable 89,500 Stockholders’ equity 238,500 Inventory 105,000 $444,500 Land 41,500 Buildings (net) 75,300 Equipment (net) 70,900 Trademarks 11,900 $444,500 The recorded amounts all approximate current values except for land (fair value of $60,400), inventory (fair value of $126,100), and trademarks (fair value of $15,680). Prepare the July 1 entry for Martinez Corporation to record the purchase. Prepare the December 31 entry for Martinez Corporation to record amortization of intangibles. The trademark has an estimated useful life of 4 years with a residual value of $4,440Wildhorse Manufacturing Inc. is a local manufacturing company. Rather than sell its product directly, Wildhorse ships its finished goods inventory to CMR Retailing Ltd., who sells the product for Wildhorse on consignment. During 2020, Wildhorse ships $119,500 in merchandise to CMR. At the end of 2020, CMR has sold 65% of the merchandise for $72,000. CMR notifies Wildhorse of the sales, retains a 20% commission, and remits the cash due to Wildhorse. Prepare all the necessary journal entries on the books of Wildhorse Manufacturing to record the consignment transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) No. Account Titles and Explanation Debit Credit 1. (To record shipped merchandise) 2. (To record year end sales entry)…On July 1, 2020, Pina Corporation purchased Young Company by paying $255,400 cash and issuing a $138,000 note payable to Steve Young. At July 1, 2020, the balance sheet of Young Company was as follows. Cash $50,800 Accounts payable $208,000 Accounts receivable 92,000 Stockholders’ equity 239,200 Inventory 107,000 $447,200 Land 40,100 Buildings (net) 75,000 Equipment (net) 71,300 Trademarks 11,000 $447,200 The recorded amounts all approximate current values except for land (fair value of $60,600), inventory (fair value of $126,800), and trademarks (fair value of $16,400). The recorded amounts all approximate current values except for land (fair value of $60,600), inventory (fair value of $126,800), and trademarks (fair value of $16,400). A.) Prepare the July 1 entry for Pina Corporation to record the purchase. (Credit account titles are…
