On January 1, 2020, Olkawa Company had capitalized cost of P8.000,000 for a new computer software product with an economic life of 4 years. The contract term for this software with client is 5 years. Sales for 2020 for the software product amounted to P4,000,000. The total sales of the software over its economic life are expected to be P20,000,000. However, the pattern of the future sales from the computer software cannot be determined relably. What is the amortization expense to be reported in the Statement of Profit or loss for the year 2020? O PS.000.000 O PA000.000 O P2.000.000 O PL600.000

On January 1, 2020, Olkawa Company had capitalized cost of P8.000,000 for a new computer software product with an economic life of 4 years. The contract term for this software with client is 5 years. Sales for 2020 for the software product amounted to P4,000,000. The total sales of the software over its economic life are expected to be P20,000,000. However, the pattern of the future sales from the computer software cannot be determined relably. What is the amortization expense to be reported in the Statement of Profit or loss for the year 2020? O PS.000.000 O PA000.000 O P2.000.000 O PL600.000

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter20: Accounting For Leases

Section: Chapter Questions

Problem 10MC: On August 1, 2019, Kern Company leased a machine to Day Company for a 6-year period requiring...

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During 2019, R Corp., a manufacturer of chocolate candies, contracted to purchase 100,000 pounds of cocoa beans at 1.00 per pound, delivery to be made in the spring of 2020. Because a record harvest is predicted for 2020, the price per pound for cocoa beans had fallen to 0.80 by December 31, 2019. Of the following journal entries, the one that would properly reflect in 2019 the effect of the commitment of R Corp. to purchase the 100,000 pounds of cocoa is:
On January 1, 2020, Tamia & Co, sold a machinery and immediately leases it back for a period of 4 years. Remaining useful life of the machinery is 10 years. Selling price is P3,000,000. Carrying amount of the machinery is P2,250,000. Annual rental is P400,000 payable every December 31, starting December 31, 2020. Implicit rate is 10% and PV factor for ordinary annuity at 10% for 4 periods is 3.169865. If the fair value of the sold and leased asset is P3,200,000, what amount of gain/loss related to the right transferred shall be recognized by the seller-lessee? a. Zero b. 950,000 c. 435,796 d. 514,204
On January 1, 2020, Mya & Co, sold a machinery and immediately leases it back for a period of 4 years. Remaining useful life of the machinery is 10 years. Selling price is P3,000,000. Carrying amount of the machinery is P2,250,000. Annual rental is P400,000 payable every December 31, starting December 31, 2020. Implicit rate is 10% and PV factor for ordinary annuity at 10% for 4 periods is 3.169865. If the fair value of the sold and leased asset is P2,800,000, what amount of gain/loss related to the right transferred shall be recognized by the seller-lessee? a. 340,225 b. 209,775 c. 550,000 d. None
On November 17, 2020, Thailand Airways entered in to a commitment to purchase 3,000barrels of aviation fuel for P9,000,000 on March 23, 2021. Thailand Airways entered into thispurchase commitment to protect itself against the volatility in the aviation fuel market.By December 31, 2020, the purchase price of aviation fuel had fallen to P2,200 perbarrel. However, by March 23, 2021, when Thailand Airways took delivery of the 3,000 barrels, the price of aviation fuel had risen to P2,500 per barrel. How much should be recognized asloss on purchase commitment on December 31, 2020? The answer is 2,400,000. Please help me find the solutions. Thank you.
On January 1, 2020, Marigold, Inc. signed a fixed-price contract to have Builder Associates construct a major plant facility at a cost of $4,419,000. It was estimated that it would take 3 years to complete the project. Also on January 1, 2020, to finance the construction cost, Marigold borrowed $4,419,000 payable in 10 annual installments of $441,900, plus interest at the rate of 10%. During 2020, Marigold made deposit and progress payments totaling $1,657,125 under the contract; the weighted-average amount of accumulated expenditures was $883,800 for the year. The excess borrowed funds were invested in short-term securities, from which Marigold realized investment income of $254,600. What amount should Marigold report as capitalized interest at December 31, 2020?
In August 2020, Atlantic Corp, commits to selling 100 of its merchandise to Boy Co. for P30,000 (P300 per product). The merchandise is to be delivered to Boy over the next 6 months. After 60 mierchandises were delivered, the contract is modified and Commonio promises to deliver 80 more products for an additional P21,600 (P270 per station). At year-end, Atlantic delivered an additional 90 products. All sales are cash on delivery Assume that the additional terms anpective modification to the original contract. How much revenue will be recognized on the contract for the year 2020?
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On January 1, 2024, Sheridan Ltd. leased a machine from Carla Vista Equipment Ltd. The machine had cost Carla Vista $416,500 to manufacture, and would normally have sold for about $595,000. The lease was for 10 years and requires equal monthly payments of $6,490, which reflects an annual interest rate of 8%. While the machine is expected to have a total useful life of 12 years, Sheridan’s management plans to return it to Carla Vista at the end of the 10-year lease. Sheridan’s management has also determined that the present value of the minimum lease payments was $534,915 at the time the lease was entered into. A.Calculate the impact that the lease will have in the first month on Sheridan’s statement of financial position. (Round answers to 0 decimal places, e.g. 125.) Right-of-use asset at the end of January. $______:1 Lease liability at the end of January $______:1 B. Calculate the impact that the lease will have in the first month on Sheridan’s statement of income.…
Gerda Motors purchased custom-made machinery on January 1, 2018, in exchange for a three-year $300,000 note with a stated annual interest rate of 3%, which is paid at the end of each year starting on December 31, 2018 through December 31, 2020. Because it was so custom, Gerda did not know the fair value of the machinery. The market rate for a note of similar risk is 7%. A. What is the value of the machinery capitalized on the balance sheet on January 1, 2018? [ Select ] ["300,000", "273,000", "278,304", "268,508"] B. How much interest expense is recognized on December 31, 2018? [ Select ] ["19,481", "21,000", "9,000", "18,796"] C. What is the carrying value of the note on December 31, 2018? [ Select ] ["278,304", "268,508", "300,000", "288,785"] Please avoid image based solution thnx
Jack, chief finance officer for sitcom products, convinced the president of the company to enter in to a 90days, forward contract to sell 500,000 kronas as a speculative venture. When the forward contract was acquired on November 1, 2019, the spot rate for the krona was OMR .8041 and the 90days future rate was OMR .8321. At December 31 2019, the end of the firm’s fiscal year, the spot rate was $.9483 and the future rate for kronas to be sold on January 30, 2020, was $.9948. On January 30, 2020, the spot rate was $.9830.Required: Prepare all necessary journal entries in regard to the forward contract.
On December 2, 2020, Moon Corp. entered into a non-cancelable purchase contract to buy 10,000 ounces of diamonds on February 12, 2021 at a price of P310 per ounce. At year-end of 2020, the market value of diamonds fell down to P270 per ounce. On February 12, 2021, the market price of diamonds skyrocketed to P320 per ounce. What is the amount of gain on recovery of Moon Corp. recognize on February 12, 2021? A. P400,000 B. No gain to be recognized C. P500,000 D. P100,000
Legaspi Company produces colorful 100% cotton shirts and the entity needs 50,000 kilos of raw materials in the production process. On December 1, 2021, the entity purchased a call option as a cash flow hedge to buy 50,000 kilos on July 1, 2022. The option strike price is P100 per kilo. The entity paid P50,000 for the call option. The derivative option contract means that if the market price is higher than P100, the entity can exercise the option and buy the asset at the strike option price of P100. If the market price is lower than P100, the entity can throw away the option and buy the asset at the cheaper price. The market price per kilo is P110 on December 31, 2021 and P115 on July 1, 2022. 1. What amount should be reported às derivative asset on December 31, 2021? a. 500,000 b. 450,000 c. 750,000 d. 700,000 2. What amount should be reported as cash settlement from the speculator on July 1, 2022? a. 750,000 b. 700,000 c. 500,000 d. 450,000