Intermediate Accounting
1st Edition
ISBN: 9780132162302
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Textbook Question
Chapter 11, Problem 3SSC
Surfing the Standards Case 3: Involuntary Conversion, IFRS
Ed’s Market Company (EMC) grows and sells fresh fruits and vegetables EMC is an IFRS reporter EMC experienced three different unfortunate events in the current year
- 1. 1 In February, the government acquired 20 acres from EMC m an eminent domain case EMC was carrying the land on its balance sheet at $6,000. The government paid EMC $10,000 EMC purchased an additional 20 acres of land on the other side of its farm for $25,000 in June to compensate for this loss
- 2. 2 In July, a fire destroyed one of EMC’s barns. The barn had an original cost of $200,000 and
accumulated depreciation of $120,000. EMC expected to receive $50,000 in insurance money. EMC received insurance proceeds of $50,000 in November. - 3. 3 In December one of EMC’s tractors was stolen The original cost of the tractor was $45,000 and the accumulated depreciation was $42,500. The tractor was insured but as of December 31, it was not determined exactly how much the insurance company would pay EMC, although it is likely to be around $5,000.
Prepare a memo to the file using the international standards for support. Include any necessary
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Check out a sample textbook solutionStudents have asked these similar questions
1.
The following intangible items are incurred on Jan 1st. What is the maximum allowable deduction? Goodwill from an acquisition of $45,000. No impairment has occurred.
Pick from the following
$2,000 $3,000 $45,000 $8,000 $3,333
2.
You are an accountant. You are interested in starting a baby clothing boutique. Last year, you spend $2,800 on surveying potential locations and some initial logo designs. You decided to buy a location to open your boutique this year. You pay an additional $4,000 in fees to open the store. Both items are considered start-up expenses. On September 1st of the current year, the boutique opens. What are your current year deductions?
Pick from the following
$5,010 $4,000 $5,040 $6,800 $5,120 $5,000
Question- please provide an answer for 1.1.3
1.1.2 Busi Ngidi is the sole proprietor of Ngidi’s Clothing Manufacturers which was
renting property in an industrial park. To expand her operations, Ngidi’spurchased its own property, demolish the old building, construct a new buildingand install new equipment. The following costs were made available Ignore VATimplications: (2)
Equipment RPurchase price of equipment- 400 000Cost of transport and installation of equipment- 70 000Fine paid for illegal transport of equipment - 10 000
Property RPurchase price of property- 840 000Legal and transfer fees- 21 000Cost of demolishing old building- 30 000Proceeds from sale of old building material- 9000Architect’s and engineers’ fees - 16 000Cost of construction of new building- 502 000
Determine which one of the following amounts represents the total capitalisedcost of the asset, property.A) R1 400 000B) R1 363 000C) R1 418 000D) R1 379 000
The answer is D) R1 379 000
1.1.3 Using the information…
5. Three years ago, (January 1, 2018), ABC purchased land with a cost of P5,000,000. ABC subsequently measures the land at revalued amount although, from the year of acquisition, the fair value wasn’t significantly different until December 31, 2023, when roads were cemented and a hospital was built nearby. Its fair value has moved up to P8,500,000. Unexpectedly, the company needs money the following year and decides to move to another business location. Eventually, the property was sold for P10,000,000 incurring a cost of P700,000 to sell it. As a result of this transaction, how much is the total impact on its equity? (indicate the word increase or decrease after the amount such as this 100,000 increase)
Chapter 11 Solutions
Intermediate Accounting
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