Financial Accounting - Access
4th Edition
ISBN: 9781259958533
Author: SPICELAND
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 7, Problem 7.3E
To determine
Basket Purchase:
For maintaining one purchase price, companies buys a group of assets at the same time and pays a lump sum amount, it is referred to as basket purchase
To determine: The amounts that company RR should record in the separate accounts for the land, the building, and the equipment.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
A government entity acquires 20 trucks for a total price of P20,000,000. The supplier provides the entity one additional truck of the same kind with a fair value of P800,000. How much will be the individual cost of each truck?
Group of answer choices
P960,000
P1,000,000
P952,381
P800,000
Sisig Corp. purchases a building with land at a cost of P100,000,000. In the sale and purchase agreement, P20,000,000 of the purchase price is attributed to the land. The building consists of 12 floors of equal space. Sisig Corp. also incurs the following costs in connection with the purchase of the property: legal and agency fees, P3,000,000; soft-launching cost to market for tenants; P500,000 and administrative expenses, P200,000.Assuming Sisig Corp. cannot sell the floors separately and uses one-half of the ground floor or 5% of the entire building for administrative purposes, and the rest of the floor area are let out to tenants, at what amount the investment property should be initially recognized?
H6.
A business sells real property for $950,000, with $600,000 of this amount being allocated to the building and the remaining $350,000 allocated to the land. The building, the only asset in its Class, had a capital cost of $800,000 and a UCC of $650,000. The adjusted cost base of the land was $250,000. What are the tax consequences of this disposition? A capital gain of $50,000 and a terminal loss of $50,000 © A capital gain of $100,000 and a capital loss of $50,000 C A capital gain of $50,000 and a terminal loss of nil © A capital gain of $100,000 and a terminal loss of $50,000 Please give accurate response
Show proper step by step calculation
Chapter 7 Solutions
Financial Accounting - Access
Ch. 7 - Prob. 1RQCh. 7 - What are the two major categories of long-term...Ch. 7 - Prob. 3RQCh. 7 - Prob. 4RQCh. 7 - Prob. 5RQCh. 7 - Prob. 6RQCh. 7 - Equipment includes machinery used in manufacturing...Ch. 7 - Prob. 8RQCh. 7 - Prob. 9RQCh. 7 - Prob. 10RQ
Ch. 7 - Prob. 11RQCh. 7 - How do we decide whether to capitalize (record as...Ch. 7 - Explain the usual accounting treatment for repairs...Ch. 7 - Prob. 14RQCh. 7 - How is the dictionary definition different from...Ch. 7 - What factors must we estimate in allocating the...Ch. 7 - Prob. 17RQCh. 7 - Prob. 18RQCh. 7 - Prob. 19RQCh. 7 - Assume that Little King Sandwiches uses...Ch. 7 - Assume Little King Sandwiches depreciates a...Ch. 7 - Prob. 22RQCh. 7 - Prob. 23RQCh. 7 - What is book value? How do we compute the gain or...Ch. 7 - Prob. 25RQCh. 7 - Prob. 26RQCh. 7 - Prob. 27RQCh. 7 - Prob. 28RQCh. 7 - Determine the initial cost of land (LO71) Fresh...Ch. 7 - Prob. 7.2BECh. 7 - Prob. 7.3BECh. 7 - Compute research and development expense (LO72)...Ch. 7 - Prob. 7.5BECh. 7 - Explain the accounting definition of depreciation...Ch. 7 - Prob. 7.7BECh. 7 - Prob. 7.8BECh. 7 - Prob. 7.9BECh. 7 - Account for the sale of long-term assets (LO76)...Ch. 7 - Account for the exchange of long-term assets...Ch. 7 - Account for the exchange of long-term assets...Ch. 7 - Prob. 7.13BECh. 7 - Determine the impairment loss (LO78) Vegetarian...Ch. 7 - Prob. 7.15BECh. 7 - McCoys Fish House purchases a tract of land and an...Ch. 7 - Orion Flour Mills purchased a new machine and made...Ch. 7 - Prob. 7.3ECh. 7 - Prob. 7.4ECh. 7 - Prob. 7.5ECh. 7 - Prob. 7.6ECh. 7 - Prob. 7.7ECh. 7 - Prob. 7.8ECh. 7 - Prob. 7.9ECh. 7 - Determine depreciation for the first year under...Ch. 7 - Deformine depreciation under three methods (LO74)...Ch. 7 - Determine straight-line depreciation for partial...Ch. 7 - Determine straight-line depreciation for partial...Ch. 7 - Prob. 7.14ECh. 7 - Prob. 7.15ECh. 7 - Prob. 7.16ECh. 7 - Record the sole of equipment (L076) Abbott...Ch. 7 - Prob. 7.18ECh. 7 - Prob. 7.19ECh. 7 - Prob. 7.20ECh. 7 - Complete the accounting cycle using long-term...Ch. 7 - The Italian Bread Company purchased land as a...Ch. 7 - Prob. 7.2APCh. 7 - Prob. 7.3APCh. 7 - Prob. 7.4APCh. 7 - Determine depreciation under three methods (LO74)...Ch. 7 - Prob. 7.6APCh. 7 - Compute depreciation, amortization, and book value...Ch. 7 - Prob. 7.8APCh. 7 - Calculate and interpret ratios (LO77) Sub Station...Ch. 7 - Calculate and interpret ratios (LO77) University...Ch. 7 - Prob. 7.1BPCh. 7 - Determine the acquisition cost of equipment (LO71)...Ch. 7 - Prob. 7.3BPCh. 7 - Prob. 7.4BPCh. 7 - Determine depreciation under three methods (LO74)...Ch. 7 - Prob. 7.6BPCh. 7 - Prob. 7.7BPCh. 7 - Record the disposal of equipment (LO76) Flip Side...Ch. 7 - Calculate and Interpret ratios (LO77) Papas Pizza...Ch. 7 - Calculate and interpret ratios (LO77) Barry...Ch. 7 - Prob. 7.1APCPCh. 7 - Prob. 7.2APFACh. 7 - Prob. 7.3APFACh. 7 - Prob. 7.4APCACh. 7 - Prob. 7.5APECh. 7 - Written Communication At a recent luncheon, you...Ch. 7 - Earnings Management Edward L. Vincent is CFO of...
Knowledge Booster
Similar questions
- 50.On August 30, 2020, AAA Company purchased a tract of land for P12,000,000. AAA incurred additional cost of P3,000,000 during the remainder of 2020 in preparing the land for sale. The tract was subdivided into residential lots as follows: Lot class Number of lots Sales price per lot A 100 240,000 B 100 160,000 C 200 100,000 Using the relative sales value method, what amount of cost should be allocated to Class C lots?arrow_forwardE10-7 Lump-Sum Purchase Garrett Corporation paid $200,000 to acquire land, buildings, and equipment. At the time of acquisition, Garrett paid $20,000 for an appraisal, which revealed the following values: land, $100,000; buildings, $125,000; and equipment, $25,000. Required: 1. What cost should the company assign to the land, buildings, and equipment, respectively? 2. Assume that Garrett uses IFRS and chooses to use the revaluation model to value its property, plant, and equip-ment. At the end of the year, the book value of the land, buildings, and equipment are $88,000, $104,000, and $18,000, respectively. The company determines that the fair value of the land, buildings, and equipment at the end of year is $110,000, $106,000, and $15,000, respectively. Prepare the journal entries that Garrett should make to value its property, plant, and equipment.arrow_forwardRed Rock Bakery purchases land, building, and equipment for a single purchase price of $300,000. However, the estimated fair values of the land, building, and equipment are $100,000, $260,000, and $40,000, respectively, for a total estimated fair value of $400,000. Required: Determine the amounts Red Rock should record in the separate accounts for the land, the building, and the equipment.arrow_forward
- 14 Majestic LLC purchased a factory for lump-sum of RO800,000 paid via bank. The fair value of each of component of the purchase is given below: Asset Fair Market value Land 85000 Building 155000 Equipment 460000 Calculate the amount at which each of the above components shall be recognized on purchase date and write the journal entry for recording purchase transaction. a. Dr Land Ac OMR 85000 Dr Building A/C 155000 Dr Equipment A/C 460000and Cr Cash A/C OMR 700000 b. Dr Land Ac OMR 97120 Dr Building A/C 177120 Dr Equipment A/C 525760 and Cr Cash A/C OMR 800000 c. None of the given options d. Dr Cash A/C OMR 800000 and Cr land A/c 97120 Cr Building A/C 177120 Equipment A/C 460000arrow_forwardCase A. Kapono Farms exchanged an old tractor for a newer model. The old tractor had a book value of $12,000(original cost of $28,000 less accumulated depreciation of $16,000) and a fair value of $9,000. Kapono paid$20,000 cash to complete the exchange. The exchange has commercial substance.Required:1. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value ofthe new tractor?2. Repeat requirement 1 assuming that the fair value of the old tractor is $14,000 instead of $9,000.arrow_forwardRed River Bakery purchases land, building, and equipment for a single purchase price of $260,000. However, the estimated fair values of the land, building, and equipment are $126,000, $198,000, and $36,000, respectively, for a total estimated fair value of $360,000. Required: Determine the amounts Red River should record in the separate accounts for the land, the building, and the equipment.arrow_forward
- Red Rock Bakery purchases land, building, and equipment for a single purchase price of $600,000. However, the estimated fair values of the land, building, and equipment are $175,000, $455,000, and $70,000, respectively, for a total estimated fair value of $700,000.Required:Determine the amounts Red Rock should record in the separate accounts for the land, thebuilding, and the equipment.arrow_forwardSan Jose Realty Corporation acquired a tract of land on January 1, 2020 for P20 million. Transaction costs paid by San Jose relating to its acquisition amounted to P800,000. The tract of land was subdivided into 400 residential lots, having an area of 200 square meters each, after making provision for public and common roads, incurring additional cost of P6,200,000. At December 31, 2021, the market value per lot was P250,000. As of December 31, 2022, 380 lots were sold and the market value of each lot had increased to P270,000. On this date, the company decided to transfer the remaining unsold lots into investment property that is to be carried under the fair value model. What amount of gain should San Jose Realty recognize as a result of the transfer from inventory to investment property? a. 5,400,000 b. 4,500,000 c. 4,050,000 d. 1,350,000arrow_forwardAnderson disposes a vacant lot for P3,000,000. The lot has an Assessor's fair value of P2,800,000, a zonal value of P3,200,000, and an appraisal value of P3,500,000. What is the capital gains tax? P 0 P180,000 P192,000 P210,000arrow_forward
- Buko Co. purchased land and building by paying P5,000,000 and assuming a mortage of P1,000,000.The land and building have fair values of P2,500,000 and P5,000,000 , respectively Buko Co. will use the buildings as its new office. Buko Co. also incurred the following costs: Land registration costs 4,000 Payment to tenants to vacate premises 4,500 Option paid on the land and building 3,000 Option paid on similar land and building not acquired 1,500 Broker’s fee on the land and building 7,500 Unpaid real estate taxes prior to acquisition date assumed by Buko Co. -assessed on land 15,000 Real estate taxes after April 1, 20x1 10,000 Repairs and renovation costs before the building is occupied 20,000 Repair costs after the building is occupied 25,000arrow_forwardAdditional information: . The building acquired had a fair value of P450,000 while the land was currently appraised at P1,800,000 • P50,000 of the option money paid were for properties not acquired. . The executives had no participation on the remodeling of the building The property taxes were for the 2020 calendar year. How much is the cost of land? A. 1,992,320 B. 1,512,000 C. 2,288,000 D. 1,856,320arrow_forwardE9-2A Allocation of Package Purchase Price Tamock Company purchased a plant from one of its suppliers. The $950,000 purchase price included the land, a building, and a factory machinery. Tamock also paid $6,000 in legal fees to negotiate the purchase of the plant. An appraisal showed the following values for the items purchased: Property Assessed Value Land $126,000 Building $456,000 Machinery $318,000 Total $900,000 Using the assessed value as a guide,…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT
Individual Income Taxes
Accounting
ISBN:9780357109731
Author:Hoffman
Publisher:CENGAGE LEARNING - CONSIGNMENT