On April 1, 2020, Concord Company received a notice from the government that a new highway was being built and that land and a building owned by the company were going to be claimed in the process. The company employed an appraiser and estimated that the land had a fair value of $ 129,960 and the building had a fair value of $ 438,900. On April 30, 2022, after some negotiations, Concord received a condemnation award of $ 592,800 cash as compensation for the forced sale of the company's land and building. The land and building cost $ 136,800 and $ 684,000, respectively, when they were acquired. On January 1, 2022, the accumulated depreciation relating to the building amounted to $ 237,120. On April 30, the accumulated depreciation relating to the building was $ 239,400. On August 1, 2022, Concord purchased a piece of replacement property for cash. The new land cost $ 102,600, and the new building cost $ 433,200. Prepare the journal entries to record the transactions on January 1, April 30, and August 1, 2022. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts)

On April 1, 2020, Concord Company received a notice from the government that a new highway was being built and that land and a building owned by the company were going to be claimed in the process. The company employed an appraiser and estimated that the land had a fair value of $ 129,960 and the building had a fair value of $ 438,900. On April 30, 2022, after some negotiations, Concord received a condemnation award of $ 592,800 cash as compensation for the forced sale of the company's land and building. The land and building cost $ 136,800 and $ 684,000, respectively, when they were acquired. On January 1, 2022, the accumulated depreciation relating to the building amounted to $ 237,120. On April 30, the accumulated depreciation relating to the building was $ 239,400. On August 1, 2022, Concord purchased a piece of replacement property for cash. The new land cost $ 102,600, and the new building cost $ 433,200. Prepare the journal entries to record the transactions on January 1, April 30, and August 1, 2022. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts)

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter17: Business Tax Credits And The Alternative Minimum Tax

Section: Chapter Questions

Problem 11P

See similar textbooks

Similar questions

At the end of 2020, Magenta Manufacturing Company discovered that construction cost had been capitalized as a cost of the factory building in 2015 when it should have been treated as a cost of production equipment installation costs. As a result of the misclassification, the depreciation through 2018 was understated by 110,000, and depreciation for 2019 was understated by 90,000. What would be the consequences of correcting for the misclassification of the property cost? a. The taxpayer uses the FIFO inventory method, and 25% of goods produced during the period were included in the ending inventory. b. The taxpayer uses the LIFO inventory method, and no new LIFO layer was added during 2019.
Petes Petroleum, Inc., an SEC registrant with a calendar year-end, is in the business of constructing and operating offs] lore oil platforms. Petes Petroleum is required legally to dismantle and remove the platforms at the end of their useful lives, which is estimated to be 10 years. On January 1, 2019, Pete constructed and began operating an offshore oil platform off the coast of Brazil. The total capitalized cost to construct the platform was 3,700,000. In addition, while the future cost of dismantling the oil platform is difficult to estimate, Pete believes there is a 40% chance that the future cost will be 1,425,000, a 40% chance it will be 1,650,000, and a 20% chance that it will cost 2,125,000. The appropriate discount rate is 12%, and Pete uses the straight-line method of depreciation. Required: 1. Prepare the journal entries that Pete should record in 2019 related to the oil platform. 2. Prepare an amortization schedule for the asset retirement obligation. 3. Next Level Prepare a table showing the effect of accounting for the asset retirement obligation on assets, liabilities, shareholders equity, and net income relative to accounting for the associated costs at the end of the assets service life when the expenditure is made.
Comprehensive: Acquisition, Subsequent Expenditures, and Depreciation On January 2, 2019, Lapar Corporation purchased a machine for 50,000. Lapar paid shipping expenses of 500, as well as installation costs of 1,200. The company estimated that the machine would have a useful life of 10 years and a residual value of 3,000. On January 1, 2020, Lapar made additions costing 3,600 to the machine in order to comply with pollution-control ordinances. These additions neither prolonged the life of the machine nor increased the residual value. Required: 1. If Lapar records depreciation expense under the straight-line method, how much is the depreciation expense for 2020? 2. Assume Lapar determines the machine has three significant components as shown below. If Lapar uses IFRS, what is the amount of depreciation expense that would be recorded?
On January 1, 2019, GUTZY Corporation purchased a tract of land (site number 101) with a dilapidated building for P1,800,000. Additionally, GUTZY paid a real state broker’s commission of P108,000, legal fees of P18,000, and title guarantee insurance of P54,000. The closing statement indicated that the land value was P1,500,000 and the building salvage value was P300,000. Shortly after the acquisition, the building was razed at a cost of P225,000. GUTZY entered into a P9,000,000 fixed-price contract with GIBA Builders, Inc. on March 1, 2019 for the construction of an office building on the land site 101. The building was completed and occupied on September 30, 2020. Additional construction costs were incurred as follows: Plans, specifications, and blueprints P 36,000 Architect’s fees for design and supervision 285,000 The building is estimated to have a forty-year life from the date of completion and will be depreciated using the 150%-declining-balance method. To finance…
On January 1, 2019, GUTZY Corporation purchased a tract of land (site number 101) with a dilapidated building for P1,800,000. Additionally, GUTZY paid a real state broker’s commission of P108,000, legal fees of P18,000 and title guarantee insurance of P54,000. The closing statement indicated that the land value was P1,500,000 and the building salvage value was P300,000. Shortly after acquisition, the building was razed at a cost of P225,000. GUTZY entered into a P9,000,000 fixed-price contract with GIBA Builders, Inc. on March 1, 2019 for the construction of an office building on the land site 101. The building was completed and occupied on September 30, 2020. Additional construction costs were incurred as follows: Plans, specifications and blueprints P 36,000 Architect’s fees for design and supervision 285,000 The building is estimated to have a forty-year life from date of completion and will be depreciated using the 150%-declining-balance method. To finance the construction…
Twin Corporation, a calendar year C Corporation, owned land it used in its business operations. The land had been purchased 7 years ago and had an adjusted basis of $800,000. The land was condemned by the State of Minnesota to expand a two-lane county highway to four lanes. On February 1, 2019, the State of Minnesota paid Twin Corporation $1,200,000 for the land. The condemnation was an involuntary conversion under IRC Section 1033. On November 1, 2019, Twin Corporation purchased a new parcel of land for $1,130,000 by using the condemnation proceeds. Under the circumstances, what is Twin Corporation Corporation’s recognized gain or loss on the involuntary conversion and its basis in the new land? Question 3 options: a) Recognized gain = $0. New Basis = $800,000. b) Recognized gain = $70,000. New Basis = $800,000. c) Recognized gain = $400,000. New Basis = $1,200,000. d)…