Principles Of Taxation For Business And Investment Planning 2020 Edition
23rd Edition
ISBN: 9781259969546
Author: Sally Jones, Shelley C. Rhoades-Catanach, Sandra R Callaghan
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 9, Problem 1IRP
To determine
Identify the issue for the situation given.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
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:
Â
Denver
Bristol
Cost
$90,000
$47,000
Accumulated depreciation
50,000
20,000
Fair value
35,000
37,000
Â
Â
Â
Â
Required:
Â
Assuming the exchange has commercial substance, prepare journal entries for Denver and Bristol to record the exchange.
Cardinals and the Rams are engaged in a nonmonetary exchange. Specifically, they will exchange their office buildings with each other. The transaction is structured as the following: Cardinals will give Rams its office building a fair market value of $13,000,000 (the original cost of the building is $5,800,000 and the accumulated depreciation on the building is $1,600,000). Rams will transfer their office building to the Cardinals. The original cost of Rams office building is $6,500,000 and the accumulated depreciation on the building is $740,000. In addition to exchanging the buildings, Rams also agrees to pay Cardinals $1,200,000 in cash and transfer 100 popcorn machines with a fair value of $100,000 (original cost of the 100 popcorn machines is $200,000 and the accumulated depreciation is $75,000). Cardinals and Rams record buildings and machines in separate accounts.
Â
1.) prepare the journal entry to record the exchange for the CARDINALS
Â
2.) prepare the journal entry to record…
Two independent companies, Denver and Bristol, each own a warehouse. On January 1, they agree to an exchange in which no cash changes hands. The following information for the two warehouses is available:
Â
Denver
Bristol
Cost
$100,000
$63,000
Accumulated depreciation
50,000
25,000
Fair value
48,000
46,000
Â
Â
Â
Â
Bristol agrees to pay Denver $2,000 to complete the exchange.
Required:
Â
Assuming the transaction has commercial substance, prepare journal entries for Denver and Bristol to record the exchange.
Chapter 9 Solutions
Principles Of Taxation For Business And Investment Planning 2020 Edition
Ch. 9 - Prob. 1QPDCh. 9 - Prob. 2QPDCh. 9 - Prob. 3QPDCh. 9 - Prob. 4QPDCh. 9 - Prob. 5QPDCh. 9 - Prob. 6QPDCh. 9 - Prob. 7QPDCh. 9 - Prob. 8QPDCh. 9 - Prob. 9QPDCh. 9 - Explain the difference between a substituted basis...
Ch. 9 - Prob. 11QPDCh. 9 - Prob. 12QPDCh. 9 - Prob. 13QPDCh. 9 - Prob. 14QPDCh. 9 - Prob. 15QPDCh. 9 - Prob. 1APCh. 9 - Prob. 2APCh. 9 - Prob. 3APCh. 9 - Prob. 4APCh. 9 - Prob. 5APCh. 9 - Prob. 6APCh. 9 - This year, Neil Inc. exchanged a business asset...Ch. 9 - Prob. 8APCh. 9 - Prob. 9APCh. 9 - XYZ exchanged an old building for a new like-kind...Ch. 9 - Prob. 11APCh. 9 - Prob. 12APCh. 9 - Prob. 13APCh. 9 - Prob. 14APCh. 9 - Prob. 15APCh. 9 - Prob. 16APCh. 9 - Prob. 17APCh. 9 - Prob. 18APCh. 9 - Prob. 19APCh. 9 - On October 18 of last year, a flood washed away...Ch. 9 - Prob. 21APCh. 9 - Prob. 22APCh. 9 - Prob. 23APCh. 9 - Mr. ZJ owns a sole proprietorship. The business...Ch. 9 - Prob. 25APCh. 9 - Prob. 26APCh. 9 - Prob. 27APCh. 9 - Prob. 28APCh. 9 - Prob. 29APCh. 9 - Prob. 30APCh. 9 - Prob. 31APCh. 9 - Prob. 32APCh. 9 - Prob. 33APCh. 9 - Prob. 34APCh. 9 - Prob. 1IRPCh. 9 - Prob. 2IRPCh. 9 - Prob. 3IRPCh. 9 - Prob. 4IRPCh. 9 - Prob. 5IRPCh. 9 - Prob. 6IRPCh. 9 - Prob. 7IRPCh. 9 - Prob. 8IRPCh. 9 - Prob. 9IRPCh. 9 - Prob. 10IRPCh. 9 - Prob. 1RPCh. 9 - Prob. 2RPCh. 9 - Prob. 3RPCh. 9 - Prob. 1TPCCh. 9 - Prob. 2TPCCh. 9 - Prob. 3TPCCh. 9 - Croyden is a calendar year, accrual basis...
Knowledge Booster
Similar questions
- Buchanan Imports purchased McLaren Corporation for $5,000,000 cash when McLaren had net assets worth $4,500,000. A. What is the amount of goodwill in this transaction? B. What is Buchanans journal entry to record the purchase of McLaren? C. What journal entry should Buchanan write when the company internally generates additional goodwill in the year following the purchase of McLaren?arrow_forwardTainan 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 atarrow_forwardOn 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 Substancearrow_forward
- Two independent companies, Denver and Bristol, each own a warehouse, and they agree to exchange them. The following information for the two warehouses is available:  Denver Bristol Cost $100,000 $62,000 Accumulated depreciation 50,000 25,000 Fair value 47,000 45,000     Bristol agrees to pay Denver $2,000 to complete the exchange. Required:  Assuming the transaction has commercial substance, prepare journal entries for Denver and Bristol to record the exchange.  CHART OF ACCOUNTS Denver and Bristol General Ledger  ASSETS 111 Cash 121 Accounts Receivable 141 Inventory 152 Prepaid Insurance 181 Building (Warehouse (new)) 182 Building (Warehouse (old)) 185 Equipment 198 Accumulated Depreciation  LIABILITIES 211 Accounts Payable 231 Salaries Payable 250 Unearned Revenue 261 Income Taxes Payable  EQUITY 311 Common Stock 331 Retained Earnings  Assume the exchange has commercial…arrow_forwardNaviNow Company agrees to pay $20 million in cash to the four former owners of TrafficEye for all of its assets and liabilities. These four owners of TrafficEye developed and patented a technology for realtime monitoring of traffic patterns on the nation’s top 200 frequently congested highways. NaviNow plans to combine the new technology with its existing global positioning systems and projects a resulting substantial revenue increase.As part of the acquisition contract, NaviNow also agrees to pay additional amounts to the former owners upon achievement of certain financial goals. NaviNow will pay $8 million to the four former owners of TrafficEye if revenues from the combined system exceed $100 million over the next three years. NaviNow estimates this contingent payment to have a probability adjusted present value of $4 million.The four former owners have also been offered employment contracts with NaviNow to help with system integration and performance enhancement issues. The…arrow_forwardOn September 3, 2024, the Robers Company exchanged equipment with Phifer Corporation. The facts of the exchange are as follows:  Robers’ Asset Phifer’s Asset Original cost $ 215,000 $ 235,000 Accumulated depreciation 131,000 139,000 Fair value 103,500 79,500 To equalize the exchange, Phifer paid Robers $24,000 in cash. Required: Record the exchange for both Robers and Phifer. The exchange has commercial substance for both companies. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.arrow_forward
- Sabio, as her original investment in the firm of Sabio and Mariano, contributed        equipment that had been recorded in the books of her own business as costing        P900,000, with accumulated depreciation of P620,000. The partners agreed on a        valuation of P400,000. They also agreed to accept Sabio's accounts receivable of        P360,000, realizable to the extent of 85%.arrow_forwardReyes and Santos formed a joint operation to acquire and sell a particular lot of merchandise Reyes was to manage the operation and to furnish the capital, and the operators were to share equal in any gain or loss. On June 10, 2024. Santos sent Reyes P10.000 cash, which was immediately used to purchase merchandise which cost P10,000. Reyes paid freight of P240 on the merchandise purchased. On June 24, one half merchandise was sold for P7,200 cash. Reves paid the cost of delivering merchandise to customers, which amounted to P260. No further transactions occurred on June 30, 2024. 1. The profit (loss) of the operation for the period June 10 - June 30, 2024 is: 2.On June 30, 2024 after recognizing the profit (loss) on the uncompleted operation, the account of Santos on the books of Reyes will show a debit (credit) balance of:arrow_forwardOn January 1, 2020, Tom Co (A seller-lessee) sells a building to MacCo (an unrelated buyerlessor) for cash of $2,000,000. The fair value of the building at that time is $1,800,000; the carrying amount immediately before the transaction is $1,000,000. At the same time, TomCo enters into a contract with MacCo for the right to use the building for 19 years, with annual payments of $120,000 payable at the end of each year. The interest rate implicit in the lease is 4.5%, which results in a present value of the annual payments of $1,459,200. The transfer of the asset to MacCo has been assessed as meeting the definition of a sale under PSAK 72. Discuss the implication of the transactions and state the journal entries on January 1, 2020arrow_forward
- On January 1, 2020, Tom Co (A seller-lessee) sells a building to MacCo (an unrelated buyerlessor) for cash of CU2,000,000. The fair value of the building at that time is CU1,800,000; the carrying amount immediately before the transaction is CU1,000,000. At the same time, TomCo enters into a contract with MacCo for the right to use the building for 18 years, with annual payments of CU120,000 payable at the end of each year. The interest rate implicit in the lease is 4.5%, which results in a present value of the annual payments of CU1,459,200. Â Discuss the implication of the transactions and state the journal entries on January 1, 2020arrow_forwardOn January 1, 2020, Tom Co (A seller-lessee) sells a building to MacCo (an unrelated buyerlessor) for cash of CU2,000,000. The fair value of the building at that time is CU1,800,000; the carrying amount immediately before the transaction is CU1,000,000. At the same time, TomCo enters into a contract with MacCo for the right to use the building for 18 years, with annual payments of CU120,000 payable at the end of each year. The interest rate implicit in the lease is 4.5%, which results in a present valueof the annual payments of CU1,459,200. The transfer of the asset to MacCo has been assessed as meeting the definition of a sale under PSAK 72.Discuss the implication of the transactions and state the journal entries on January 1, 2020arrow_forward
arrow_back_ios
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