Noble Ltd has a business operation that represents a separate cash-generating unit. At 30 June 2021, the carrying amounts of the assets of the business, valued pursuant to the cost model, are as follows: Assets: $ Cash 21,000 Equipment 400,000 Less: accumulated depreciation (50,000) Land 150,000 Inventory 2,000 Goodwill 20,000 Carrying amount of cash-generating unit 543,000 The directors of Noble Ltd estimate that, at 30 June 2021, the fair value less costs to sell of the business amounts to $440,000, while the value in use of the business is $490,000. The inventory was recorded at lower of cost and net realisable value. The land had a fair value less costs to sell of $135,000. Required: Determine how Noble Ltd should account for the results of the impairment test at 30 June 2021 and prepare any necessary journal entries. Show all workings and provide explanations to support your answer where necessary.

Noble Ltd has a business operation that represents a separate cash-generating unit. At 30 June 2021, the carrying amounts of the assets of the business, valued pursuant to the cost model, are as follows: Assets: $ Cash 21,000 Equipment 400,000 Less: accumulated depreciation (50,000) Land 150,000 Inventory 2,000 Goodwill 20,000 Carrying amount of cash-generating unit 543,000 The directors of Noble Ltd estimate that, at 30 June 2021, the fair value less costs to sell of the business amounts to $440,000, while the value in use of the business is $490,000. The inventory was recorded at lower of cost and net realisable value. The land had a fair value less costs to sell of $135,000. Required: Determine how Noble Ltd should account for the results of the impairment test at 30 June 2021 and prepare any necessary journal entries. Show all workings and provide explanations to support your answer where necessary.

Name: Noble Ltd has a business operation that represents a separate cash-ge
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Description: Noble Ltd has a business operation that represents a separate cash-generatingunit. At 30 June 2021, the carrying amounts of the assets of the business, valuedpursuant to the cost model, are as follows: Assets: $ Cash 21,000 Equipment400,000 Less: ac

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter14: Statement Of Cash Flows

Section: Chapter Questions

Problem 37E: During 20X1, Craig Company had the following transactions: a. Purchased 300,000 of 10-year bonds...

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During 20X1, Craig Company had the following transactions: a. Purchased 300,000 of 10-year bonds issued by Makenzie Inc. b. Acquired land valued at 105,000 in exchange for machinery. c. Sold equipment with original cost of 810,000 for 495,000; accumulated depreciation taken on the equipment to the point of sale was 270,000. d. Purchased new machinery for 180,000. e. Purchased common stock in Lemmons Company for 82,500. Required: 1. Prepare the net cash from investing activities section of the statement of cash flows. 2. CONCEPTUAL CONNECTION Usually, the net cash from investing activities is negative. How can Craig cover this negative cash flow? What other information would you like to have to make this decision?
Garcia Co. owns equipment that costs $76,800, with accumulated depreciation of $40,800. Garcia sells the equipment for cash. Record the journal entry for the sale of the equipment if Garcia were to sell the equipment for the following amounts: A. $47,000 cash B. $36,000 cash C. $31,000 cash
Gray Companys financial statements showed income before income taxes of 4,030,000 for the year ended December 31, 2020, and 3,330,000 for the year ended December 31, 2019. Additional information is as follows: Capital expenditures were 2,800,000 in 2020 and 4,000,000 in 2019. Included in the 2020 capital expenditures is equipment purchased for 1,000,000 on January 1, 2020, with no salvage value. Gray used straight-line depreciation based on a 10-year estimated life in its financial statements. As a result of additional information now available, it is estimated that this equipment should have only an 8-year life. Gray made an error in its financial statements that should be regarded as material. A payment of 180,000 was made in January 2020 and charged to expense in 2020 for insurance premiums applicable to policies commencing and expiring in 2019. No liability had been recorded for this item at December 31, 2019. The allowance for doubtful accounts reflected in Grays financial statements was 7,000 at December 31, 2020, and 97,000 at December 31, 2019. During 2020, 90,000 of uncollectible receivables were written off against the allowance for doubtful accounts. In 2019, the provision for doubtful accounts was based on a percentage of net sales. The 2020 provision has not yet been recorded. Net sales were 58,500,000 for the year ended December 31, 2020, and 49,230,000 for the year ended December 31, 2019. Based on the latest available facts, the 2020 provision for doubtful accounts is estimated to be 0.2% of net sales. A review of the estimated warranty liability at December 31, 2020, which is included in other liabilities in Grays financial statements, has disclosed that this estimated liability should be increased 170,000. Gray has two large blast furnaces that it uses in its manufacturing process. These furnaces must be periodically relined. Furnace A was relined in January 2014 at a cost of 230,000 and in January 2019 at a cost of 280,000. Furnace B was relined for the first time in January 2020 at a cost of 300,000. In Grays financial statements, these costs were expensed as incurred. Since a relining will last for 5 years, Grays management feels it would be preferable to capitalize and depreciate the cost of the relining over the productive life of the relining. Gray has decided to nuke a change in accounting principle from expensing relining costs as incurred to capitalizing them and depreciating them over their productive life on a straight-line basis with a full years depreciation in the year of relining. This change meets the requirements for a change in accounting principle under GAAP. Required: 1. For the years ended December 31, 2020 and 2019, prepare a worksheet reconciling income before income taxes as given previously with income before income taxes as adjusted for the preceding additional information. Show supporting computations in good form. Ignore income taxes and deferred tax considerations in your answer. The worksheet should have the following format: 2. As of January 1, 2020, compute the retrospective adjustment of retained earnings for the change in accounting principle from expensing to capitalizing relining costs. Ignore income taxes and deferred tax considerations in your answer.
SA Inc. provided the following information on December 31, 2021: Cash 5,000,000 Financial assets at fair value through profit or loss, including cost of P500,000 of YSA Inc. 2,500,000 Accounts receivable 3,000,000 Inventory 1,000,000 Land 30,000,000 Equipment 10,000,000 Accumulated depreciation - equipment 6,000,000 Building 40,000,000 Accumulated depreciation - building 14,000,000 Furniture and Fixtures 15,000,000 Accumulated depreciation - Furniture and Fixtures 3,900,000 Accounts payable, after deducting debit balances in supplier's accounts amounting to P200,000 4,500,000 Accrued expenses payable 500,000 Bonds payable, due December 31, 2022 3,500,000 Discount on bonds payable 500,000 Deferred tax liability 300,000 Dividends payable 400,000 Credit balances of customers' accounts 50,000 Share dividend payable 200,000 15% note payable issued on July 1, 2020, maturing on July 1, 2022 6,000,000 20% note payable issued on August 31, 2020, maturing on August 31, 2021 3,000,000 Estimated…
SA Inc. provided the following information on December 31, 2021: Cash 5,000,000 Financial assets at fair value through profit or loss, including cost of P500,000 of YSA Inc. 2,500,000 Accounts receivable 3,000,000 Inventory 1,000,000 Land 30,000,000 Equipment 10,000,000 Accumulated depreciation - equipment 6,000,000 Building 40,000,000 Accumulated depreciation - building 14,000,000 Furniture and Fixtures 15,000,000 Accumulated depreciation - Furniture and Fixtures 3,900,000 Accounts payable, after deducting debit balances in supplier's accounts amounting to P200,000 4,500,000 Accrued expenses payable 500,000 Bonds payable, due December 31, 2022 3,500,000 Discount on bonds payable 500,000 Deferred tax liability 300,000 Dividends payable 400,000 Credit balances of customers' accounts 50,000 Share dividend payable 200,000 15% note payable issued on July 1, 2020, maturing on July 1, 2022 6,000,000 20% note payable issued on August 31, 2020, maturing on August 31, 2021 3,000,000 Estimated…
YSA Inc. provided the following information on December 31, 2021: Cash 5,000,000 Financial assets at fair value through profit or loss, including cost of P500,000 of YSA Inc. 2,500,000 Accounts receivable 3,000,000 Inventory 1,000,000 Land 30,000,000 Equipment 10,000,000 Accumulated depreciation - equipment 6,000,000 Building 40,000,000 Accumulated depreciation - building 14,000,000 Furniture and Fixtures 15,000,000 Accumulated depreciation - Furniture and Fixtures 3,900,000 Accounts payable, after deducting debit balances in supplier's accounts amounting to P200,000 4,500,000 Accrued expenses payable 500,000 Bonds payable, due December 31, 2022 3,500,000 Discount on bonds payable 500,000 Deferred tax liability 300,000 Dividends payable 400,000 Credit balances of customers' accounts 50,000 Share dividend payable 200,000 15% note payable issued on July 1, 2020, maturing on July 1, 2022 6,000,000 20% note payable issued on August 31, 2020, maturing on August 31, 2021 3,000,000…
Blue Spruce Photography reported net income of $92,000 for 2022. Included in the income statement were depreciation expense of $5,500, patent amortization expense of $3,200, and a gain on disposal of plant assets of $1,800. Blue Spruce Photography's comparative balance sheets show the following balances. 12/31/22 12/31/21 Accounts receivable $19,400 $25,400 Accounts payable 8,400 5,200 Calculate net cash provided by operating activities for Blue Spruce Photography. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
ATC Corporation had the following data in 2021: Revenues were P8,000,000, operating expenses totalled P7,200,000 that included depreciation of P150,000 and intangible asset amortization of P20,000. The profit and loss also reported unrealized loss on equity investments at fair market value through profit or loss of P18,000 and gain on sale of equipment of P28,000. How much is the net cash flow from operating activities?
Peter Senen Corporation provided the following account balances as of September 30, 2020:Cash P112,000 Accumulated depreciation P 36,000Accounts Receivable 64,000 Accounts payable 40,000Finished Goods 48,000 Income tax payable 9,000Work in process 36,000 Share Capital 500,000Raw materials 52,000 Retained Earnings 207,000Property and Equipment 480,000The following transactions occurred during October:1. Materials purchased on account, P150,0002. Materials issued to production: direct materials- P90,000, Indirect materials- P10,000.3. Payroll for the month of October 2020 consisted of the following (also paid during the month):Direct labor P62,000 Administrative salaries P16,000Indirect Labor 20,000Sales salaries 30,000Payroll deductions were as follows:Withholding taxes P19,800 Phil health contributions P2,000SSS contributions 7,100 HDMF contributions 2,0004. Employer contributions for the month were accrued:Factory Selling AdministrativeSSS contributions P5,700 P2,000 P1,100Philhealth…
On 1 November 2020, Bermuda Ltd acquired all the assets and liabilities (other than cash) of Triangle Ltd. The details on the assets and liabilities of Triangle Ltd were as follows: Carrying Amount Fair Value Cash 30,000 30,000 Equipment 120,000 140,000 Accounts Receivable 25,000 25,000 Furniture 35,000 25,000 Accounts Payable 10,000 10,000 Income tax Payable 19,000 19,000 Annual Leave Payable 14,000 14,000 In addition to the above items, Triangle Ltd had an internally generated brand name with a fair value of $75,000 that was not recognized in its accounts. The consideration Bermuda Ltd paid to Triangle Ltd was $80,000 cash and 20,000 shares. The fair value of each Bermuda Ltd share is $10. Bermuda Ltd paid $20,000 in acquisition-related costs. The tax rate is 30%. Required: Conduct an acquisition analysis for Bermuda
On 1 November 2020, Bermuda Ltd acquired all the assets and liabilities (other than cash) of Triangle Ltd. The details on the assets and liabilities of Triangle Ltd were as follows: Carrying Amount Fair Value Cash 30,000 30,000 Equipment 120,000 140,000 Accounts Receivable 25,000 25,000 Furniture 35,000 25,000 Accounts Payable 10,000 10,000 Income tax Payable 19,000 19,000 Annual Leave Payable 14,000 14,000 In addition to the above items Triangle Ltd had an internally generated brand name with a fair value of $75,000 that was not recognised in its accounts. The consideration Bermuda Ltd paid to Triangle Ltd was $80,000 cash and 20,000 shares. The fair value of each Bermuda Ltd share is $10. Bermuda Ltd paid $20,000 in acquisition related costs. Tax rate is 30%.
At December 31, 2022, Ayayai Corporation reported the following plant assets. Land $ 3,003,000 Buildings $26,510,000 Less: Accumulated depreciation—buildings 11,936,925 14,573,075 Equipment 40,040,000 Less: Accumulated depreciation—equipment 5,005,000 35,035,000 Total plant assets $52,611,075 During 2023, the following selected cash transactions occurred. Apr. 1 Purchased land for $2,202,200. May 1 Sold equipment that cost $600,600 when purchased on January 1, 2016. The equipment was sold for $170,170. June 1 Sold land for $1,601,600. The land cost $1,001,000. July 1 Purchased equipment for $1,101,100. Dec. 31 Retired equipment that cost $700,700 when purchased on December 31, 2013. No salvage value was received. Journalize the transactions. Ayayai uses straight-line depreciation for buildings and equipment. The buildings are estimated to have a 40-year useful life and no salvage…