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- BBB,Inc sells its unprofitable division A at a gain of $20,000. Before the sale, division A had a net loss of $50,000 for the period. Which of the following is true? The$20,000. Before the sale, Division U had a net loss of $50,000 for the period. Which of the following is true O The $20,000 gain on sale will be disclosed in the notes to the financial statements only, with the 550 operations. The $50,000 net loss will be a part of continuing operations and the $20,000 gain on sale will be a part of discontinued operations. The $20,000 gain on sale will be a part of continuing operations and the $50,000 net loss wil be a part of discontinued operations. Both the net loss of $50,000 as well as the gain on sale of $20,000 will be included as a part of discontinued operations.This year, Sigma, Incorporated generated $612,000 income from its routine businessoperations. In addition, the corporation sold the following assets, all of which wereheld for more than 12 months:Initial BasisAccumulatedDepreciation* Sale PriceMarketable securities $ 144,000 $ 0 $ 64,000Production equipment 93,000 76,000 30,000Business realty:Land 165,000 0 180,000Building 200,000 58,300 210,000*Through date of sale.Required:a. Compute Sigma’s taxable income assuming that it used the straight-line method tocalculate depreciation on the building and has no nonrecaptured Section 1231losses.b. Recompute taxable income assuming that Sigma sold the securities for $150,000rather than $64,000.During the current year, Puppy Company incurred P4,000,000 in exploration cost for each 15 oil sells drilled in the current year. Of the 15 wells drilled, 10 were dry holes. Th entity used the successful effort method of accounting. The entity deleted 30% of the oil discovered in the current year. What amount of exploration cost would be reported in the year- end statement of financial position? a. 42,000,000 b. 14,000,000 c. 20,000,000 d. 6,000,000
- This year, Sigma, Incorporated generated $612,000 income from its routine business operations. In addition, the corporation sold the following assets, all of which were held for more than 12 months: Marketable securities This year, Sigma, Incorporated generated $612,000 income from its routine business operations. In addition, the corporation sold the following assets, all of which were held for more than 12 months: Initial Basis Accumulated Depreciation* Sale Price Marketable securities $144,000 $0 $64,000 Production equipment 93,000 76,000 30,000 Business realty: Land 165,000 0 180,000 Building 200,000 58,300 210,000 *Through date of sale. Required: Compute Sigma’s taxable income assuming that it used the straight-line method to calculate depreciation on the building and has no nonrecaptured Section 1231 losses. Recompute taxable income assuming that Sigma sold the securities for $150,000 rather than…Akron, Inc., owns all outstanding stock of Toledo Corporation. Amortization expense of $15,000 per year for patented technology resulted from the original acquisition. For 2018, the companies had the following account balances: Akron ToledoSales . . . . . . .. $1,100,000 $600,000Cost of goods sold 500,000 400,000Operating expenses 400,000 220,000Investment income . . Not given –0–Dividends declared . . .80,000 30,000 Intra-entity sales of $320,000 occurred during 2017 and again in 2018. This merchandise cost $240,000 each year. Of the total transfers, $70,000 was still held on December 31, 2017, with $50,000 unsold on December 31, 2018.a. For consolidation purposes, does the direction of the transfers (upstream or downstream) affect the balances to be reported here?b. Prepare a consolidated income statement for the year ending December 31, 2018.At the beginning of the year 1, Down Under Company raises $60 million of equity and uses the proceeds to buy a fixed asset. Operating profits before depreciation (all received in cash) and dividends for the company are expected to be $40 million in year 1, $50 million in year 2, and $60 million in year 3, ath which point the company terminates. The firsms pays no taxes. Assuming stright line depreciation to zero (of 20 million per year) the firm's profits thus equal $20 in year 1, $30 million in year 2 and $40 milion in year 3. If the cost of equity is 6%, the value of the firms equity is: Use the Abnormal Earnings Valuation Method Hint: Book Value per year is affected by the 20 million every year
- Pia Company commits to a plan t o dispose of one of its operating segments. The disposal meets the requirements for discontinued operations. Records disclosed the following for the disposal group: Carrying amount P8,000,000 Fair value less costs to sell 6,500,000 Loss from operations 2,000,000 Expected operating loss prior to disposal 500,000 Disregarding income tax, how much will be reported as loss from discontinued operations? a. P4,000,000 b. P3,500,000. c. P2,000,000 d. P1,500,000At the beginning of the year 1, Down Under Company raises $60 million of equity and uses the proceeds to buy a fixed asset. Operating profits before depreciation (all received in cash) and dividends for the company are expected to be $40 million in year 1, $50 million in year 2, and $60 million in year 3, ath which point the company terminates. The firms pays no taxes. Assuming stright line depreciation to zero (of 20 million per year) the firm's profits thus equal $20 in year 1, $30 million in year 2 and $40 milion in year 3. If the cost of equity is 6%, the value of the firms equity is: Use the Discounted Dividend Valuation Methodplease solve with working On January 3, 2024, Roberts Company purchased 30% of the 100,000 shares of common stock of Thomas Corporation, paying $1,500,000. There was no goodwill or other cost allocation associated with the investment. Roberts has significant influence over Thomas. During 2024, Thomas reported net income of $300,000 and paid dividends of $100,000. On January 4, 2025, Roberts sold 15,000 shares for $800,000. What was the balance in the investment account before the shares were sold?
- ABC Company is in a capital deficiency position and is considering the possibility of liquidation. An analysis of the assets and liabilities of the entity is provided: Assets at net realizable value (pledged against liabilities of P150,000) 250,000 Assets at net realizable value (pledged against liabilities of P260,000) 100,000 Assets at net realizable value (not pledged against any liabilities) 160,000 Liabilities with priority 85,000 Unsecured creditors 400,000 Round off the estimated recovery percentage to XX.XX%, if needed. How much is the estimated payment to partially secured creditors?Joni Marin Inc. has the following amounts reported in its general ledger at the end of the current year. Organization costs $24,400 Trademarks 16,900 Discount on bonds payable 37,400 Deposits with advertising agency for ads to promote goodwill of company 12,400 Excess of cost over fair value of net identifiable assets of acquired subsidiary 77,400 Cost of equipment acquired for research and development projects; the equipment has an alternative future use 87,400 Costs of developing a secret formula for a product that is expected to be marketed for at least 20 years 83,800 (a)On the basis of this information, compute the total amount to be reported by Marin for intangible assets on its balance sheet at year-end. Total amount reported for intangible assets __________CARAT CORP. has completed its current year financial statements which reveal, in part, the following information: *Profit for the year - P110,000 *Total Comprehensive Income - P130,000 *Other comprehensive income relates to the revaluation of land and buildings to fair value *Dividends paid - P35,000 *Opening equity balances - share capital P300,000, retained earnings P220,000, asset revalution surplus P60,000 *No more share capital was issued during the reporting period The total equity at the end of the current year is: Choices a. 695,000 b. 675,000 c. 655,000 d. 580,000