Prepare the journal entries on the books of Archibald Corp assuming that the exchange would have commercial substance. Prepare the journal entries on the books of Archibald Corp assuming that the exchange would have no commercial substance.
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- Question Content Area Richards, Inc. exchanged a piece of equipment with an original cost of $82,000, accumulated depreciation to date of $40,000, and a fair value of $46,000 for a similar piece of equipment. Cash flows are not expected to change significantly. The newly acquired equipment had a book value of $40,000 and a fair market value of $41,000. At what value should Richard record the newly-acquired equipment? $40,000 $41,000 $46,000 $42,000PROBLEM 3 (No. 6 and 7 are based on the following problem) Panganiban Company acquired an equipment on January 1, 2023, costing the company P1,500,000. It was at revalued amount less any accumulated depreciation and accumulated impairment losses and transfers a portion of its revaluation surplus as the asset is used every period On December 31, 2023, the fair value of the asset was P1,687,500 and the company appropriately recorded its revaluation surplus. On December 31, 2025, the recoverable amount of the asset was determined to be P1,010,625 On December 31, 2026, the fair value of the asset was determined to be P1,095,000 5. What amount of revaluation surplus should be credited in equity on December 31, 2023? 6. What amount of impairment loss should be reported by Panganiban Company on December 31, 2025. hlam)Hw.104. On January 3, Luna Inc. acquired all noncash assets and assumed all liabilities of Saturn Company at a cash purchase price of $960,000. Luna determined that the fair value of the assets acquired in the transaction is $1,120,000 and the fair value of liabilities is $480,000. The book value of the net assets at the purchase date was $600,000. a. Determine the amount of goodwill recorded by Luna upon purchase of Saturn Company. b. Assume that Luna is a private company that elects to amortize goodwill on a straight-line basis over 10 years. Prepare the amortization entry at December 31
- Easter Company’s 12/31/2021 statement of financial position reports assets of $5,000,000 and liabilities of $2,000,000. All of Easter’s assets’ book values approximate their fair value, except for land, which has a fair value that is $300,000 greater than its book value. On 12/31/2021, Wendell Corporation paid $5,100,000 to acquire Easter. Calculate the amount of goodwill Wendell should record as a result of this purchase.1. Question: What is the goodwill arising from the acquisition? a. ₱ 2,700,000 b. ₱ 4,450,000 c. ₱ 2,450,000 d. ₱ 700,000 CARNATION Company purchased an entity for ₱6,000,000 cash on January 31. The book value and fair value of the assets of the acquired entity as of the date of acquisition follow:21. The Oscar Corporation acquired land, buildings, and equipment from a bankrupt company at a lump-sum price of $180,000. At the time of acquisition, Oscar paid $12,000 to have the assets appraised. The appraisal disclosed the following values: Land .................................................. $120,000 Buildings ............................................. 80,000 Equipment ............................................. 40,000 What cost should be assigned to the land, buildings, and equipment, respectively? a. $64,000, $64,000, and $64,000 b. $90,000, $60,000, and $30,000 c. $96,000, $64,000, and $32,000 d. $120,000, $80,000, and $40,000 22. Peterson, Inc. purchased a machine under a deferred payment contract on December 31, 2001. Under the terms of the contract, Peterson is required to make eight annual payments of $140,000 each beginning December 31, 2002. The appropriate interest rate is 8 percent. The purchase price…
- Q: Determine the cost of the amount to be reported for the followings. JJ Company acquires real estate at a cash cost of Rs= 1,000,000. The property contains an old warehouse that is razed at Rs=40,000 in costs and Rs15,000 proceeds from salvaged materials. Additional expenditures are the attorney’s fee =Rs5,000, and the real estate broker’s commission= Rs25,000. Required: Determine the amount to be reported as the cost of the land? DD Company purchases a delivery truck at a cash price of Rs=840,000. Related expenditures are sales taxes Rs= 26,400, painting and lettering Rs=10,000, motor vehicle license Rs= 1200, and a three-year accident insurance policy Rs=30,000. Compute the cost of the delivery truck?5. ABC Company purchased Tara Company for P8, 000,000 cash. Tara Company had total liabilities of P3, 000,000. ABC Company’s assessment of the fair value is obtained when it purchased Tara Company is as follows:Cash 1, 000,000Inventory 500,000In-process research and development 5, 000,000Assembled workforce 1, 200,000What is the goodwill arising from the acquisition?Problem 4: Ocean Company recently acquired several items of property, plant and equipment. The transactions are as follows: Purchases a building for P1, 000, 000 in cash and 50, 000 shares of Ocean company with P100 par value which sold for P120 on transaction date Received a parcel of land located in Davao City from a philanthropist as an inducement to locate a plant in the city. The land has a fair value of P1, 500, 000. Acquired a machinery for cash. The machinery was priced at P800, 000 and a 5% cash discount is allowed Acquired an equipment for P200, 000 by issuing a 60-day, 12% note. Required: Determine the cost of the ff: Building_____________________ Land______________________ Machinery_________________ Equipment_____________________ What is the rule in solving the problem?
- 14 Majestic LLC purchased a factory for lump-sum of RO800,000 paid via bank. The fair value of each of component of the purchase is given below: Asset Fair Market value Land 85000 Building 155000 Equipment 460000 Calculate the amount at which each of the above components shall be recognized on purchase date and write the journal entry for recording purchase transaction. a. Dr Land Ac OMR 85000 Dr Building A/C 155000 Dr Equipment A/C 460000and Cr Cash A/C OMR 700000 b. Dr Land Ac OMR 97120 Dr Building A/C 177120 Dr Equipment A/C 525760 and Cr Cash A/C OMR 800000 c. None of the given options d. Dr Cash A/C OMR 800000 and Cr land A/c 97120 Cr Building A/C 177120 Equipment A/C 460000Topic: Intangible Assets (Goodwill) Guinevere Company is planning to sell the business to new interests. The cumulative net earnings for the past five years amounted to P16,500,000 including expropriation loss of P1,500,000. The normal rate of return is 20%. The fair value of net assets of entity at current year end was P10,000,000. Excess earnings are purchased for 5 years P8,000,000 Excess earnings are capitalized at 25% P6,400,000 Annual average earnings are purchased for 3 years P10,800,000 What is the amount of goodwill if: 1. Annual average earnings are capitalized at 25%? A. 1,600,000 B. 3,600,000 C. 4,400,000 D. 2,000,000 2. Excess earnings are discounted at 12% for 5 years? (the PV of an ordinary annuity of 1 for 5 years at 12% is 3.60) A. 12,960,000 B. 10,800,000 C. 5,760,000 D. 7,200,000How much should be recorded as the purchase price of theindividual PPE items: 5. The old equipment has an original cost of P1,500,000,accumulated depreciation of P600,000, and fair value ofP1,000,000. The new equipment obtained throughexchange has a fair value of P1,200,000. The balance was settled with cash. The exchange will not affect the future cashflows of the entity.