What should the company record as depreciation expense for the first year under the straight line method? *
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On January 1, 2020, Banana Co. entered into a contract to acquire a new machine for its factory. The machine, which had a cash price of P300,000, was paid for as follows: Down payment P30,000; Note payable in 10 equal monthly installments P240,000; 1,000 shares of Banana Co. ordinary shares with an agreed value of P50 per share: P50,000 Total P320,000. Prior to the machine's use, installation costs of P8,000 were incurred. The machine has an estimated useful life of 10 years and salvage value of P10,000. What should the company record as
P29,800
P30,000
P31,000
P31,800
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- On July 1, 2019, Aldrich Company purchased as an available-for-sale security 200,000 face value, 9% U.S. Treasury notes for 194,000. The notes mature July 1, 2020, and pay interest semiannually on January 1 and July 1. The notes were sold on December 1, 2019, for 199,000. Aldrich normally uses straight-line amortization on all of its notes. In its income statement for the year ended December 31, 2019, what amount should Aldrich report as a gain on the sale of the available-for-sale security? a. 2,500 b. 3,500 c. 5,000 d. 6,000On August 1, 2019, Kern Company leased a machine to Day Company for a 6-year period requiring payments of 10,000 at the beginning of each year. The machine cost 40,000 and has a useful life of 8 years with no residual value. Kerns implicit interest rate is 10%, and present value factors are as follows: Present value for an annuity due of 1 at 10% for 6 periods4.791 Present value for an annuity due of 1 at 10% for 8 periods5.868 Kern appropriately recorded the lease as a sales-type lease. At the inception of the lease, the Lease Receivable account balance should be: a. 60,000 b. 58,680 c. 48,000 d. 47,910On January 1, 2019, Mopps Corp. agrees to provide Conklin Company 3 years of cleaning and janitorial services. The contract sets the price at 12,000 per year, which is the normal standalone price that Mopps charges. On December 31, 2020, Mopps and Conklin agree to modify the contract. Mopps reduces the fee for the third year to 10,000, and Conklin agrees to a 4-year extension that will extend services through December 31, 2024, at a price of 15,000 per year. At the time that the contract is modified, Mopps is charging other customers 13,500 for the cleaning and janitorial service. Required: Should Mopps and Conklin treat the modification as a separate contract? If so how should Mopps account for the contract modification on December 31, 2020? Support your opinion by discussing the application to this case of the factors that need to be considered for determining the accounting for contract modifications.
- (Appendix 14.1)Pamlico Company has a 500,000, 15%, 3-year note dated January 1, 2019, payable to Forest National Bank. On December 31, 2020, the bank agreed to settle the note and unpaid interest of 75,000 for 50,000 cash and marketable securities having a current market value of 375,000. Pamlicos acquisition cost of the securities is 385,000. Ignoring income taxes, what amount should Pamlico report as a gain from the debt restructuring on its 2020 income statement? a. 65,000 b. 75,000 c. 140,000 d. 150,000Grummet Company is acquiring a new wood lathe with a cash purchase price of $80,000. The Wood Master Industries (the manufacturer) has agreed to accept $23,500 at the end of each of the next 4 years. Based on this deal, how much interest will Grummet pay over the life of the loan? A. $94,000 B. $80,000 C. $23,500 D. $14,000On January 1, 2020, Banana Co. entered into a contract to acquire a new machine for its factory. The machine, which had a cash price of P300,000, was paid for as follows: Down payment P30,000; Note payable in 10 equal monthly installments P240,000; 1,000 shares of Banana Co. ordinary shares with an agreed value of P50 per share: P50,000 Total P320,000. Prior to the machine's use, installation costs of P8,000 were incurred. The machine has an estimated useful life of 10 years and salvage value of P10,000. What should the company record as depreciation expense for the first year under the straight line method?
- On January 1, 2020, Ferdie Company entered into a contract to acquire a new machine for its factory. The machine, which has a cash price of P295,000, was paid for as follows: Down payment P80,000 6% Notes payable (payable in four equal annual payments starting December 31, 2020) 200,000 500 ordinary shares of Gemrey Co. P100 par with a market value of P110. 50,000 At what amount should Ferdie initially measure its machine?On January 1, 2020, ABC Co. entered into a contract to acquire a newmachine for its factory. The machine, which had a cash price of $300,000,was paid for as follows: Down payment $30,000; Note payable in 10 equalmonthly installments $240,000; 1,000 shares of Banana Co. ordinaryshares with an agreed value of $50 per share: $50,000 Total $320,000.Prior to the machine's use, installation costs of $8,000 were incurred. Themachine has an estimated useful life of 10 years and salvage value of$10,000. What should the company record as depreciation expense forthe first year under the straight line method?In January 2019, Cordova Company entered into a contract to acquire a new machine for its factory. The machine, which has a cash price of $280,000, was paid for as follows: Down payment $130,000 Note payable in 4 equal annual payments starting in January 2020 $120,000 500 shares of Cordova preferred stock with a mutually agreed value of $100 per share (par value $100) $50,000 Fair rate of interest on the non-interest-bearing note 10% GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 2 3 4 5 6
- On January 1, 2020, ABC Company purchased an equipment with a cash price of P2,000,000. The supplier can choose how the purchase is to be settled.The choices are 20,000 shares with par value of P50 in one year’s time, or a cash payment equal to the market value of 15,000 phantom shares on December 31, 2020. At grant date on January 1, 2020, the market price of each share is P80 and on the date of settlement on December 31, 2020, the market price of each share is P100.What is the equity component arising from the purchase of equipment with share and cash alternative? What amount of interest expense should be recognized on December 31, 2020 if the supplier has chosen the cash alternative?On January 1, 2020, Planet Company purchased an equipment with a cash price of P2,000,000. The supplier can choose how the purchase is to be settled. The choices are 20,000 shares with par value of P50 in one year's time, or a cash payment equal to the market value of 15,000 phantom shares on December 31, 2020. At grant date on January 1, 2020, the market price of each share is P80 and on the date of settlement on December 31, 2020, the market price of each share is P100. What is the equity component arising from the purchase of equipment with share and cash alternative?On January 1, 2020, Planet Company purchased an equipment with a cash price of P2,000,000. The supplier can choose how the purchase is to be settled. The choices are 20,000 shares with par value of P50 in one year's time, or a cash payment equal to the market value of 15,000 phantom shares on December 31, 2020. At grant date on January 1, 2020, the market price of each share is P80 and on the date of settlement on December 31, 2020, the market price of each share is P100. What amount should be recognized as share premium on December 31, 2020 if the supplier has chosen the share alternative?