The "alpha", a small construction company, owed the company BETA 4000 euros, an amount that it had difficulty repaying. The two parties finally agreed that ALPHA should cover its debt by carrying out oil painting of the BETA offices of equal value. Determine the
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The "alpha", a small construction company, owed the company BETA 4000 euros, an amount that it had difficulty repaying. The two parties finally agreed that ALPHA should cover its debt by carrying out oil painting of the BETA offices of equal value.
Determine the accounting handling of the transaction by both parties and document the response based on the relevant conceptual definitions.
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- Finley Company is looking for a new office location and sees a building with a fair value of $740,000. Finley also notices that much of the equipment in the existing building would be useful to its own operations. Finley estimates the fair value of the equipment to be $114,000. Finley offers to buy both the building and the equipment for $790,000, and the offer is accepted. Determine the amounts Finley should record in the separate accounts for building and equipment. (Do not round intermediate calculations.)Damian is an entity which prepares financial statements, in accordance with International Financial Reporting Standards (IFRS), to 30 September each year. On 1 April 2018, Damian accepted delivery of a large and complex machine from a supplier. The agreed purchase price for the machine was £2 million. Damian received 10% trade discount. On 1 April 2018, Damian incurred direct costs of £50,000 in handling the machine and £25,000 in installing the machine at its premises. Although the machine was ready for use from 1 April 2018, Damian did not bring the machine into use until 30 April 2018. During April 2018 Damian incurred costs of £200,000 in training relevant staff to use the machine. The directors of Damian estimate that the machine is capable of being usefully employed in the business until 31 March 2023, and that it will have no residual value at that date. Damian uses the straight-line method for calculating the depreciation. On 31 March 2023, Damian will be legally required…Finley Co. is looking for a new office location and sees a building with a fair value of $400,000. Finley also notices that much of the equipment in the existing building would be useful to its own operations. Finley estimates the fair value of the equipment to be $80,000. Finley offers to buy both the building and the equipment for $450,000, and the offer is accepted. Determine the amounts Finley should record in the separate accounts for building and equipment.
- Bank Islam entered into an Ijarah contract with Tamrin Bhd to lease an equipment for a period of 4 years. The bank purchased an equipment from a local trader on the 1st of January 2003 for RM260,000. The bank also incurred legal fees of RM3,000 relating to the Ijarah contract which the bank considered to be material. Other detail about the Ijarah are as follows: Fair value of the equipment: At the beginning of 2003 RM260,000 At the end of the lease i.e. 31 December 2006 RM30,000 Number of instalment on bi-monthly basis 24 Rentals at the end of every two months RM15,000 Estimated useful life 4 years Estimated residual value at the end of useful life RM20,000 Estimated expenditure incurred in second year RM15,000 Required:…present in good accounting form AAA Company signed a contract charging a customer P600,000 to change the windows of a customer's house. The contract includes costs for materials and labor. The Company would charge P250,000 for materials if sold separately and P500,000 for labor if the customer will purchase the needed materials. How much of the transaction price would the company allocate to its performance obligation to provide the needed services to the customer?Cline Inc. prepares its financial statements according to International Accounting Standards (IFRS). It recently concluded that it will lose a lawsuit, and that it will pay a range of damages falling somewhere between $10 million and $20 million. Cline should accrue a liability in the amount of. a. $0, as no specific amount is probable to be incurred. b. $10 million, the lower end of the range of probable amounts. c. $15 million, the expected value of the amount to be paid. d. $20 million, the upper end of the range of probable amounts.
- On August 1, two independent companies, Denver and Broncos, each own a machine and they agree to an exchange. The following information is available: Denver Cost $90,000 Broncos cost $45,000 Accumulated Depreciation Denver 55,000 Accumulated Depreciation Broncos 25,000 Fair Value Denver 28,000 Fair Value Broncos 30,000. Denver agrees to pay Broncos $2,000 to complete the exchange. Why does Denver agree to pay $2,000 to Broncos? Prepare the necessary journal entry by Denver Company to record this transaction, assuming the exchange has A) Commercial Substance B) No Commercial Substance 3) Prepare the necessary journal entry by Broncos to record this transaction, assuming the exchange has A) Commercial Substance. B) No Commercial SubstanceIn November 20X2, an entity contracts with a customer to refurbish a 3-storey building and install new elevators for a total consideration of ₱5,000,000. The promised refurbishment service, including the installation of elevators, is a single performance obligation satisfied over time. Total expected costs are ₱4,000,000, including ₱1,500,000 for the elevators. The entity determines that it acts as a principal because it obtains control of the elevators before they are transferred to the customer. A summary of the transaction price and expected costs is as follows: Transaction price ₱5,000,000 Expected costs: Elevators ₱1,500,000 Other costs 2,500,000 Total expected costs ₱4,000,000 The entity uses an input method based on costs incurred to measure its…Jake, a CPA, has prepared a statement of affairs. Assets which there are no claims or liens are expected to produce P140,000, which must be allocated to unsecured claims of all classes totaling P210,000. The following are some of the claims outstanding: i. Accounting fees for Black, P3,000 ii. An unrecorded note for P2,000, on which P120 of interest has accrued, held by Blue. iii. A note for P6,000 secured by P8,000 receivables, estimated to be 60% collectible held by Orange. iv. A P3,000 note, on which P60 of interest has accrued, held by Pink. Property with a book value of P2,000 and a market value of P3,600 is pledged to guarantee payment of principal and interest. v. Unpaid income taxes P7,000 Compute the estimated payment to partially secured creditors:
- Two independent companies, Denver and Bristol, each own a warehouse and Denver agrees to pay Bristol $2,000 to complete the exchange. On January 1, they agree to an exchange in which no cash changes hands. The following information for the two warehouses is available: Denver Bristol Cost $90,000 $47,000 Accumulated depreciation 50,000 20,000 Fair value 35,000 37,000 Required: Assuming the exchange has commercial substance, prepare journal entries for Denver and Bristol to record the exchange.On January 1, 20x1, Pongcuter Co. enters into a contract with a customer to grant a software licensefor ₱1,000,000. The fee is payable at contract inception. The license has a term of four years, toreckon from the date the customer can use the software. The customer can determine how andwhen to use the right without further performance by Pongcuter Co. and does not expect thatPongcuter Co. will undertake any activities that significantly affect the intellectual property towhich the customer has rights. The software is transferred to the customer on February 1, 20x1.However, the code, which is necessary for the customer to use the software, is transferred only onApril 1, 20x1. How should Pongcuter Co. recognize revenue from the fixed consideration in thecontract?a. in full on February 1, 20x1b. in full on April 1, 20x1c. deferred and amortized over four years starting on February 1, 20x1d. deferred and amortized over four years starting on April 1, 20x1Tainan company decides to exchange its old machine and $2,600,000 cash for a new machine. The old machine has a book value of $1,400,000 and a fair value of $2,400,000 on the date of the exchange. If this transaction has commercial substance, the cost of the new machine would be recorded at