Presented below is information related to equipment owned by Sunland Company at December 31, 2020. Cost $10,170,000 Accumulated depreciation to date 1,130,000 Expected future net cash flows 7,910,000 Fair value 5,424,000 Assume that Sunland will continue to use this asset in the future. As of December 31, 2020, the equipment has a remaining useful life of 4 years.
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A: (a) Required journal entry: Working note:
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A: The following calculations are done for Grand Company.
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A: An impairment incurs when the expected future cash flows (un discounted) of an asset is less than…
Q: Presented below is information related to equipment owned by Sunland Company at December 31, 2020.…
A: Net book value after impairment on Dec 31, 2020 = Book value - accumulated depreciation - impairment…
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A: Depreciation: Depreciation is a method of reducing the capitalized cost of long-lived operating…
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Q: Presented below is information related to equipment owned by Sunland Company at December 31, 2020.…
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Q: Presented below is information related to equipment owned by Vaughn Company at December 31, 2020.…
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- A machine cost $229,000, has annual depreciation expense of $45,800, and has accumulated depreciation of $114,500 on December 31, 2020. On April 1, 2021, when the machine has a fair value of $91,210, it is exchanged for a similar machine with a fair value of $291,900 and the proper amount of cash is paid. The exchange lacked commercial substance.Prepare all entries that are necessary at April 1, 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit April 1, 2021 (To record depreciation) April 1, 2021 (To record exchange of machineries)On January 2, 2021, Teal Mountain Company purchased a patent for $47,800. The patent has an estimated useful life of 25 years and a 20-year legal life.What entry would the company make at December 31, 2021 to record amortization expense on the patent? (Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)At the end of 2022, Neck Company discovered that patent amortization expense of $222,000 had not been recorded in 2021 or 2022. If Neck has not closed the books for 2022, the journal entry to correct the error will Answer a. a debit to Retained Earnings and a credit to Patent for $444,000. b. a debit to Amortization Expense and a credit to Patent for $444,000. c. a debit to Amortization Expense and a credit to Patent for $222,000. d. include debits to Retained Earnings and Amortization Expense of $222,000 and a credit to Patent for $444,000.
- Leni Company had a balance of P820,000 in the professional fees expense account on December 31, 2020, before considering year-end adjustments relating to the following: ➢Consultants were hired for a special project at a total fee not to exceed P650,000.The entity had recorded P550,000 of these fees based on building for work performed in 2020. ➢The attorney’s letter requested by the auditor dated Jan. 31, 2021, indicated that legal fees of P60,000 were billed on Jan. 15, 2021 for worked performed in Nov.2020, and the unbilled fees for Dec. 31, 2020 were P70,000. What amount should be reported as professional fees expense for the year ended December 31, 2020?Euphoria Company had a balance of P820,000 in the professional fees expense account on December 31, 2020, before considering year-end adjustments relating to the following:➢ Consultants were hired for a special project at a total fee not to exceed P650,000. The entity had recorded P550,000 of these fees based on building for work performed in 2020.➢ The attorney’s letter requested by the auditor dated Jan. 31, 2021, indicated that legal fees of P60,000 were billed on Jan. 15, 2021 for worked performed in Nov. 2020, and the unbilled fees for Dec. 31, 2020 were P70,000.What amount should be reported as professional fees expense for the year ended December 31, 2020?Mathew Corporation's had a specific receivable from a customer in the amount of P 600,000 as of December 31, 2020. During 2021, the customer informed Mathew Corporation that servicing of its payable will be made once there is significant improvement in their financial capabilities. Since there are no available historical data relating to similar borrowers, Mathew Corporation uses its experienced judgment to estimate the amount of impairment loss. Reasonable estimate revealed that the fair value of the receivable as of December 31, 2021 represents 40% of the outstanding receivable. QUESTION:What amount of impairment loss on its receivable should Mathew report for 2021?
- When the records of Debra Hanson Corporation were reviewed at the close of 2021, the following errors were discovered. For each item, indicate by a check mark in the appropriate column whether the error resulted in an overstatement, an understatement, or had no effect on net income for the years 2020 and 2021. 2020 2021 Item Over-statement Under-statement No Effect Over-statement Under-statement No Effect 1. Failure to record amortization of patent in 2021. 2. Failure to record the correct amount of ending 2020 inventory. The amount was understated because of an error in calculation. 3. Failure to record merchandise purchased in 2020. Merchandise was also omitted from ending inventory in 2020 but was not yet sold. 4. Failure to record accrued interest on notes payable in 2020; that amount was recorded when paid in 2021. 5. Failure to reflect…On December 31, 2018, Sunland Company is in financial difficulty and cannot pay a note due that day. It is a $3100000 note with $310000 accrued interest payable to Wildhorse, Inc. Wildhorse agrees to accept from Sunland equipment that has a fair value of $1460000, an original cost of $2400000, and accumulated depreciation of $1140000. Wildhorse also forgives the accrued interest, extends the maturity date to December 31, 2021, reduces the face amount of the note to $1260000, and reduces the interest rate to 6%, with interest payable at the end of each year.Sunland should recognize a gain on the partial settlement and restructure of the debt of $0. $363200. $463200. $75600.The Laura Company has the following errors on its books as of December 31, 2020. The books for 2020 have not yet been closed. a. In 2020, fully depreciated equipment (with no residual value) that originally cost $8,000 was sold for $700 as scrap. The company credited the $700 proceeds to Equipment. b. On January 1, 2019, the company recorded the purchase of equipment in exchange for a three-year, noninterest-bearing note payable in the amount of $10,000. Interest rates were then 8%, but no recognition was made of this fact. The present value of $1 at 8% for three periods is 0.7938. (Ignore depreciation.) Required: Prepare journal entries to correct these errors at December 31, 2020. Ignore income taxes.
- At the end of 2019, Framber Company received $8000 as a prepayment for renting a building to a tenant during 2020. The company erroneously recorded the transaction by debiting Cash and crediting Rent Revenue in 2019 instead of 2020. Upon discovery of this error in 2020, what correcting journal entry will Framber make? Ignore income taxes.Culver Corp., a public company using IFRS, signed a long-term non-cancellable purchase commitment with a major supplier to purchase raw materials at an annual cost of $2,300,000. At December 31, 2019, the raw materials to be purchased in 2020 have a market price of $2,095,000. Prepare any December 31, 2019 entry that is needed. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31, 2019 enter an account title for the journal entry on December 31, 2019 enter a debit amount enter a credit amount enter an account title for the journal entry on December 31, 2019 enter a debit amount enter a credit amount In 2020, Culver receives the raw materials and pays the required $2,300,000. The raw materials now have a market value of…Bravo Company purchased a two-year insurance policy on August 1, 2021 for P28,800. Using an asset method, the reversing entry shall entail? a. A debit to prepaid insurance of P6,000 b. A debit to insurance expense of P6,00 c. A debit to insurance expense of P22,800 d. A credit to insurance expense of P22,800. e. the answer is not given