Galore Company ventured into construction of a condominium in Makati which is rated as the largest state-of-the-art structure.The entity's board of directors decided that instead of selling the condominium, the entity would hold thisproperty for purposes of eaming rentals by letting out space to business executives in the area.The construction of the condominium was completed and the property was placed in service on January 12019.The cost of the construction was P50,000,000. The useful life of the condominium is 25 years and its residualvalue is P5,000,000.An independent valuation expert provided the following fair value at each subsequent year-end:December 31, 2019December 31, 2020December 31, 202155,000,00053,000,00060,000,000Required:Prepare all indicated entries for 2019, 2020 and 2021 assuming the investment property is accounted for underthe cost model and fair value model.

Journal entry is the process of recording the business transactions in the accounting books for the…

Answered: Galore Company ventured into…

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter18: Corporations: Organization And Capital Structure

Section: Chapter Questions

Problem 38P

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GGG Company ventured into construction of a condominium in Baguio which is rated as the largest state-of-the-art structure. The board of directors decided that instead of selling the condominium, the entity would hold this property for purposes of earning rentals by letting out space to business executives in the area. The construction of the condominium was completed and the property was placed in service on January 1, 2019. The cost of the construction was P50,000,000. The useful life of the condominium is 25 years and the residual value is P5,000,000. An independent valuation expert provided the following hair value at each subsequent year-end: December 31, 2019 = 55,000,000; December 31, 2020 = 53,000,000; December 31, 2021 = 60,000,000. Under fair value model, what amount should be recognized as gain from change in fair value in 2019?
GGG Company ventured into construction of a condominium in Baguio which is rated as the largest state-of-the-art structure. The board of directors decided that instead of selling the condominium, the entity would hold this property for purposes of earning rentals by letting out space to business executives in the area. The construction of the condominium was completed and the property was placed in service on January 1, 2019. The cost of the construction was P50,000,000. The useful life of the condominium is 25 years and the residual value is P5,000,000. An independent valuation expert provided the following hair value at each subsequent year-end: December 31, 2019 = 55,000,000; December 31, 2020 = 53,000,000; December 31, 2021 = 60,000,000. Under the cost model, what amount should be reported as depreciation on investment property for 2019?
CHOOSE THE LETTER OF ANSWER Galore Company ventured into construction of a condominium in Makati which is rated as the largest state-of-the art structure. The board of directors decided that instead of selling the condominium, the entity would hold this property for purposes of earning rentals by leasing out space to business executives in the area. The construction of the condominium was completed and the property was placed in service on January 1, 2020. The cost of the condominium was P50,000,000. The useful life of the condominium is 25 years and the residual value is P5,000,000. An independent valuation expert provided the following fair value at each subsequent year-end:December 31, 2020 55,000,000December 31, 2021 53,000,000December 31, 2022 60,000,000 Under the cost model, what amount should be reported as annual depreciation of investment property? a. 1,800,000b. 2,000,000c. 2,200,000d. 0 under the fair Value model, what amount should be recognized as gain from change in fair…
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Your client, Portsmouth Mining, recently entered into an agreement to obtain the rights to operate a coal mine in Virginia for $15 million. Portsmouth incurred development costs of $6 million in preparing the mine for extraction, which began on Jul 1, 2021. The contract requires Portsmouth to restore the land and surrounding area to its original condition after extraction is complete in three years. The company controller, Anna Dickson, is not sure how to account for the restoration costs and has asked your advice. Anna is aware of an accounting standard addressing this issue, but is not sure of its provisions. She has narrowed down the possible cash outflows for the restoration costs to four possibilities. Cash Outflow Probability $ 3 million 20% $ 4 million 30% $ 5 million 25%…
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In early 2020, James, Inc. announced its intention to construct a manufacturing facility in the Shenandoah Valley. To persuade James, Inc. to locate the facility in Burton County, the county government contributed a six-acre tract of undeveloped county land to the corporation. The appraised FMV of the land at the date of the contribution was $280,000. Soon after accepting the contribution, James, Inc. paid $3,300 to an attorney to do a title search to make sure that it had uncontested ownership of the land. James also paid $12,900 for a survey and site map of the six acres and $1,360 for two water wells drilled on the land. Did James recognize income because of the receipt of the land? What is the proper tax treatment of James’ $17,560 expenditure with respect to the land? In 2021, James’s attorney discovered that the estate of Elsa Reynolds claimed title to the six acres and was preparing to file suit in Virginia state court to regain ownership and possession. The attorney advised…
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