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On January 2, 2011, Blink Corporation was granted 5,000 acres of land in a village, located near the slums outside city limits, by a local government authority. The condition attached to this grant was that Blink Corporation should clean up this land and lay roads by employing laborers from the village in which the land is located. The government has fix the minimum wage payable to the workers. The entire operation will take three years and is estimated to cost P100,000,000. This amount will be spent in this way, P20,000,000 each in the first, P30,000,000 in the second years and P50,000,000 in the third year. The fair value of the land is currently P120,000,000.
What portion of the grant is recognized for the year ended December 31, 2012?
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- Tree Lovers Inc. purchased 2,500 acres of woodland in which it intends to harvest the complete forest, leaving the land barren and worthless. Tree Lovers paid $5,000,000 for the land. Tree Lovers will sell the lumber as it is harvested and it expects to deplete it over ten years (150 acres in year one, 300 acres in year two, 250 acres in year three, 150 acres in year four, and 100 acres in year five). Calculate the depletion expense for the next five years and create the journal entry for year one.On July 1, 2004, the national government granted a parcel of land located in Baliuag, Bulacan to Black. On the date of grant, the land had a fair value of P2,000,000. The grant required Black to construct a cold storage building on the site. Black finished the construction of the building, which costs P4,000,000 and has an estimated useful life of 25 years, on January 2, 2005. How much income from the government grant should be recognized in 2005? a. P2,000,000 b. P160,000 c. P80,000 d. P0On March 1, 2022, Ayayai Company acquired real estate on which it planned to construct a small office building, by paying $75,000 in cash. An old warehouse on the property was demolished at a cost of $8,000; the salvaged materials were sold for $1,500. Additional expenditures before construction began included $1,000 attorney’s fee for work concerning the land purchase, $4,000 real estate broker’s fee, $7,000 architect’s fee, and $13,000 to put in driveways and a parking lot.Determine the amount to be reported as the cost of the land. Cost of land $enter the cost of land in dollars
- During 2024, YellowCard constructed a small manufacturing facility specifically to manufacture one particular accessory. YellowCard paid the construction contractor $5,000,000 cash (which was the total contract price) and placed the facility into service on January 1, 2025. Because of technological change, YellowCard anticipates that the manufacturing facility will be useful for no more than 10 years. The local government where the facility is located required that, at the end of the 10-year period, YellowCard remediate the facility so that it can be used as a community center. YellowCard estimates the cost of remediation will be $500,000. YellowCard uses straight-line depreciation with $0 salvage value for its plant asset and a 10% discount rate for asset retirement obligations. Instructions Prepare the journal entries to record the January 1, 2025, transactionsPrepare adjusting entries to record depreciation and interest expense on December 31, 2025.On March 1, 2022, Wildhorse Company acquired real estate, on which it planned to construct a small office building, by paying $98,000 in cash. An old warehouse on the property was demolished at a cost of $ 11,000; the salvaged materials were sold for $ 3,100. Additional expenditures before construction began included $ 2,000 attorney's fee for work concerning the land purchase, $ 6,300real estate broker's fee, $ 10,800 architect's fee, and $ 18,200 to put in driveways and a parking lot. For each cost not used in previous part, indicate the account to be debited. Account to be debited enter an account title $ enter a debit amount enter an account title $ enter a debit amountOn August 1, 20x1, ABC Co. received a P1,800,000 grant from the government to aid in ABC Co.’s clean-up drive in a nearby creek. The cleanup took ABC Co. 6 months to complete from September 1, 20x1 to March 1, 20x2. The clean-up costs totaled P2,700,000 and were incurred evenly. If ABC Co. uses the gross presentation, how much is the income from the government grant in 20x1? How much is the balance of the deferred income from the government grant on December 31, 20x1? If ABC Co. uses the net presentation, how much is the cost of the cleanup recognized as an expense in 20x1? On July 1, 20x1, a flood-damaged one of ABC’s buildings. The building has a carrying amount of P24,000,000 before the flood. Because of the damages, the building is now assessed to have a recoverable amount of only P9,000,000 and a reduced remaining useful life of 4 years. To aid in the loss, the government granted ABC Co. P200,000 cash. How much is the income from government grants in 20x1?
- Gloria Hernandez is the controller of a public company. She just completed a meeting with her superior, John Harrison, who is the CFO of the company. Harrison tried to convince Hernandez to go along with his proposal to combine 12 expenditures for repair and maintenance of a plant asset into one amount ($1 million). Each of the expenditures is less than $100,000, the cutoff point for capitalizing expenditures as an asset and depreciating it over the useful life. Hernandez asked for time to think about the matter. As the controller and chief accounting officer of the company, Hernandez knows it’s her responsibility to decide how to record the expenditures. She knows that the $1 million amount is material to earnings and the rules in accounting require expensing of each individual item, not capitalization. However, she is under a great deal of pressure to go along with capitalization to boost earnings and meet financial analysts’ earnings expectations, and provide for a bonus to top…Gloria Hernandez is the controller of a public company. She just completed a meeting with her superior, John Harrison, who is the CFO of the company. Harrison tried to convince Hernandez to go along with his proposal to combine 12 expenditures for repair and maintenance of a plant asset into one amount ($1 million). Each of the expenditures is less than $100,000, the cutoff point for capitalizing expenditures as an asset and depreciating it over the useful life. Hernandez asked for time to think about the matter. As the controller and chief accounting officer of the company, Hernandez knows it’s her responsibility to decide how to record the expenditures. She knows that the $1 million amount is material to earnings and the rules in accounting require expensing of each individual item, not capitalization. However, she is under a great deal of pressure to go along with capitalization to boost earnings and meet financial analysts’ earnings expectations, and provide for a bonus to top…Altona City opened a landfill that it elects to account for in an enterprise fund. At the time the landfill was opened the government estimated total capacity of the landfill to be 5 million cubic feet, useful life to be 20 years, and total closure and postclosure costs to be $18 million. At the end of Year 1, the government reestimated total closure costs to be $18.3 million and estimated capacity to be same as the original estimate. At the end of Year 2, the government reestimated total capacity to be 4.8 million cubic feet and total closure costs to be $18.5 million. At the end of Year 3, the government reestimated useful life to be 17 years but capacity remained unchanged from the preceding year and closure and postclosure costs were estimated to be $18.4 million. REQUIRED: Prepare journal entries in the enterprise fund to record the following events. a)During Year 1, the city estimates that 300,000 cubic feet of capacity were used. Record the landfill expense. b)During…
- On January 1, 2017, the City of Hastings created a solid waste landfill that it expects to reach capacity gradually over the next 20 years. If the landfill were to be closed at the current time, closure costs would be approximately $1.2 million plus an additional $700,000 for postclosure work. Of these totals, the city must pay $50,000 on December 31 of each year for preliminary closure work. At the end of 2017, the landfill reached 3 percent of capacity. At the end of 2018, the landfill reached 9 percent of capacity. Also at the end of 2018, a reassessment is made; total closure costs are determined to be $1.4 million rather than $1.2 million.a. Assuming that the landfill is viewed as an enterprise fund, what journal entries are made in 2017 and 2018 on the government-wide financial statements?b. Assuming that the landfill is reported within the general fund, what journal entries are made in 2017 and 2018 on the government-wide financial statements?c. Assuming that the landfill is…On January 1, 2017, the City of Hastings created a solid waste landfill that it expects to reach capacity gradually over the next 20 years. If the landfill were to be closed at the current time, closure costs would be approximately $1.2 million plus an additional $700,000 for postclosure work. Of these totals, the city must pay $50,000 on December 31 of each year for preliminary closure work. At the end of 2017, the landfill reached 3 percent of capacity. At the end of 2018, the landfill reached 9 percent of capacity. Also at the end of 2018, a reassessment is made; total closure costs are determined to be $1.4 million rather than $1.2 million. Assuming that the landfill is viewed as an enterprise fund, what journal entries are made in 2017 and 2018 on the government-wide financial statements? Assuming that the landfill is reported within the general fund, what journal entries are made in 2017 and 2018 on the government-wide financial statements? Assuming that the landfill is viewed…