If the sale will extend beyond one year, what amount of gain or loss should the company report in its 2014 profit or loss?
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On July 2014, Thunder Company is committed to a plan to sell a disposal group that represents a significant portion of its regulated operations. The sale requires regulatory approval, which could extend the period required to complete the sale beyond one year. Actions necessary to obtain that approval cannot be initiated until after a buyer is known and a firm purchase commitment is obtained. However, a firm purchase commitment is highly probable within one year. The noncurrent assets of disposal group have a carrying value of P4,000,000 and liabilities of P1,000,000. The total fair market value as of December 31, 2014 of the disposal group is P4,800,000. If the sale is completed within one year, the estimated cost to sell is P200,000, but if the sale will extend beyond one year, the present value of the estimated cost to sell is P180,000. If the sale will extend beyond one year, what amount of gain or loss should the company report in its 2014 profit or loss?
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- On June 30, 2022, L Company classified a non-current asset as “Held for Sale.” On this date, before its reclassification, its carrying amount was P5,000,000 and its expected selling price was P4,500,000, with expected cost to sell of P300,000. By December 31, 2022, the asset had not yet been sold, but the management is still committed to a plan to sell it, and the sale is considered to be highly probable. The entity estimated that because of recent changes for the demand of the product that is produced by the asset and expected favorable price movement, the asset was now expected to be selling at P5,500,000 with related cost to sell unchanged. Depreciation from July 1 to December 31 would have been P500,000. What amount of gain shall be recognized at December 31, 2022 as a result of the increase in the fair value less cost to sell of the asset?On June 30, 2020, ACME Incorporated decided to sell a storage facility that was no longer suitable for the company's operations. The following information was taken from the accounting records at January 01, 2020: Acquisition date: January 2, 2000 Acquisition cost: $800,000 Useful life: 40 years Residual value: $0 Accumulated depreciation: $400,000 Management has an authorized plan in place to sell the facility and, all criteria for classification as held for sale are met. The building's estimated fair value is $360,000 and expected sales commissions are 10% of the sales price. At December 31 (year end) the fair value was unchanged and the sale had not been completed. Required: (a) Prepare all required journal entries for June 30. Round final answers to the nearest dollar and show calculations below the journal entry. (b) How will the building be classified assuming ACME reports under IFRS? (c) How will the building be classified assuming ACME reports under ASPE?On January 1. 2024, Ghosh Industries leased a high-performance conveyer to Karrier Company for a four-year period ending December 31,2027 , at which time possession of the leased asset will revert back to Ghosh. - The equipment cost Ghosh$960,000and has an expected useful life of five years. - Ghosh expects the residual value at December 31, 2027, will be$304,000. - Negotiations led to the lessee guaranteeing a$344,000residual value - Equal payments under the finance/sales-type lease are$204,000and are due on December 31 of each year with the first payment being made on December 31, 2024. - Karrier is aware that Ghosh used a4%interest rate when calculating lease payments. Note: Use tables, Excel, or a financial calculator. (EV of \$1. PV of \$1. EVA of$1, PVA of S1. FVAD of$1and PVAD of S1) Required: 1. Prepare the appropriate entries for both Karrier and Ghosh on January 1, 2024, to record the lease. 2. Prepare all appropriate entries for both Karrier and Ghosh on December 31, 2024,…
- On December 31, 2020, the entity classified as held for sale a machine with carrying amount of P6,000,000. On this date, the machine is expected to be sold for P5,520,000. Disposal cost is expected at P240,000. On December 31, 2021, the machine had not been sold and management after considering its options decided to place back the machine into operations. On this date, the entity estimated that the machine is expected to be sold at P5,160,000 with the disposal cost at P60,000. The carrying amount of the machine was P4,800,000 on December 31, 2021 if the noncurrent asset was not classified as held for sale. Required: Compute the impairment loss for 2020.On January 1, 2021, Central Industries leased a high-performance conveyer to Dynamic Company for a four-year period ending December 31, 2021, at which time possession of the leased asset will revert back to Central. The equipment cost Central $1,912,000 and has an expected useful life of five years. Central expects the residual value at December 31, 2025, will be $600,000. Negotiations led to the lessee guaranteeing a $680,000 residual value. Equal payments under the finance/sales-type lease are due on December 31 of each year with the first payment being made on December 31, 2021. Dynamic is aware that Central used a 5% interest rate when calculating lease payments.What is the amount that the lessee will record as Right-of-use-Asset and Lease Liability ?On January 1, 2021, Central Industries leased a high-performance conveyer to Dynamic Company for a four-year period ending December 31, 2021, at which time possession of the leased asset will revert back to Central. The equipment cost Central $1,912,000 and has an expected useful life of five years. Central expects the residual value at December 31, 2025, will be $600,000. Negotiations led to the lessee guaranteeing a $680,000 residual value.Equal payments under the finance/sales-type lease are $400,000 and are due on December 31 of each year with the first payment being made on December 31, 2021. Dynamic is aware that Central used a 5% interest rate when calculating lease payments. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) 1. Prepare the appropriate journal entries for both Dynamic and Central on January 1, 2021, to record the lease.2. Prepare all appropriate journal entries for both Dynamic and Central…
- Rhone-Metro Industries manufactures equipment that is sold or leased. On December 31, 2016, Rhone-Metro leased equipment to Western Soya Co. for a four-year period ending December 31, 2020, at which time possession of the leased asset will revert back to Rhone-Metro. The equipment cost $300,000 to manufacture and has an expected useful life of six years. Its normal sales price is $365,760. The expected residual value of $25,000 at December 31, 2020, is not guaranteed. Equal payments under the lease are $104,000 (including $4,000 executory costs) and are due on December 31 of each year. The first payment was made on December 31, 2016. Collectibility of the remaining lease payments is reasonably assured, and Rhone-Metro has no material cost uncertainties. Western Soya’s incremental borrowing rate is 12%. Western Soya knows the interest rate implicit in the lease payments is 10%. Both companies use straight-line depreciation. Required: 1. Show how Rhone-Metro calculated the $104,000…On December 31, 2020, Sardines Company has an item of machinery with a cost of $4,500,000 and an accumulated depreciation of $1,800,000. On this date, the machinery is found to be impaired due to obsolescence and a major physical damage. The entity made an assessment and test for recoverability of the asset and determined that the machinery's estimated selling price is $2,500,000 and estimated disposal cost is $250,000. The entity expects net future undiscounted cash flows related to the continued use and eventual disposal of the machinery of $2,600,000. The net future discount cashflows related to the continued use and eventual disposal of the machinery using a discount rate of 10% is $2,180,000. Sardines should report an impairment loss in 2020 of?MG Corporation acquired a patent for a new product for $260,000 on 2 January 2013 with a useful life of 12 years. Based on exception market conditions, the patent was estimated to have a useful life of only 8 years. During 2019 the product was determined worthless and to be removed from industry. Required: Write the journal entries to record the patent and amortization charges for 2013? Based on the information given, record the amortization charges for 2019 assuming amortization is recorded at the end of each year? answer both asap thnx
- On December 31, 2020, Patriarch, Inc. determined to sell a group of assets within its meat processing plant, as it believed a newly introduced set of machineries would be more economical for the company. The assets that it wanted to sell had the following carrying amounts: Machinery 2,200,000 Accumulated depreciation 1,200,000 Machinery tools 380,000 Machinery parts 220,000 The management of Patriarch, Inc. calculated the fair value (based on active market for similar assets) less cost to sell of the disposal group to be P1,400,000. The assets were sold on March 17, 2021 for P1,520,000. Selling costs of P60,000 were paid. Required: Prepare the entries on December 31, 2020.JAY Inc. decided to revalue its machine on December 31, 2019, and determined that the current replacement cost is $1,500,000. The machine, which was purchased last January 1, 2017 for $1,000,000 has a carrying value of $400,000. The entity has been consistent in depreciating its machine using the straight-line method. On September 1, 2021, the entity sold the machine for $140.000. How much is the revaluation surplus as of December 31, 2020? A. $300,000 B. $100,000 C. $200,000 D. $550,000 Can you please answer this proven by a solution?Sure-Bilt Construction Company is considering selling excess machinery with a book value of $278,400 (original cost of $398,100 less accumulated depreciation of $119,700) for $276,300, less a 5% brokerage commission. Alternatively, the machinery can be leased to another company for a total of $287,500 for five years, after which it is expected to have no residual value. During the period of the lease, Sure-Bilt Construction Company's costs of repairs, insurance, and property tax expenses are expected to be $25,900. a. Prepare a differential analysis, dated May 25 to determine whether Sure-Bilt should lease (Alternative 1) or sell (Alternative 2) the machinery. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Lease Machinery (Alt. 1) or Sell Machinery (Alt. 2) May 25 Lease Machinery(Alternative 1) Sell Machinery(Alternative 2) Differential Effecton Income(Alternative 2) Revenues $ $ $ Costs…
