30. A building previously occupied by Grand Company with a cost of P10 million and an accumulated depreciation of P5.5 million is reclassified as investment property. At the time of reclassification, the building has a fair value of P5 million. Using the fair value model, upon reclassification to investment property, at what amount should Grand record the investment property and what amount of gain is recognized in profit or loss, respectively? P4.5 million and P500,000 P5 million and PO P5 million and P500,000 P4.5 million and PO

30. A building previously occupied by Grand Company with a cost of P10 million and an accumulated depreciation of P5.5 million is reclassified as investment property. At the time of reclassification, the building has a fair value of P5 million. Using the fair value model, upon reclassification to investment property, at what amount should Grand record the investment property and what amount of gain is recognized in profit or loss, respectively? P4.5 million and P500,000 P5 million and PO P5 million and P500,000 P4.5 million and PO

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Spectrum Ltd owns the following properties at 1 April 2012: Property A: An office building used by…

A: The objective of the question is to prepare extracts from Spectrum Ltd.’s entity statement of profit…

Q: On 31 December 2023, the statement of financial position of Dominic Ltd showed the following…

A: Revaluation of AssetsRevaluation of assets refers to the process of assessing the fair market value…

Q: On 13 February 20X5, Reekwa Company purchased an office tower for $31.6 million. The office is a…

A: At elimination method the revaluation in the asset is revalued on the basis of the accumaled…

Q: A business sells real property for $950,000, with $600,000 of this amount being allocated to the…

A: A capital asset generates a gain when it is sold or otherwise disposed of for more money than it…

Q: * Identifiable Net Assets do not include goodwill. Prepare the journal entry, if needed, to record…

A: To determine if there is goodwill impairment using the FASB's simplified approach, we compare the…

Q: 2. ABC Ltd acquired a property on 1 January 2004 at a cost of 4 GH¢00,000 and immediately occupied…

A: Introduction:- A journal entry is the act of recording or keeping track of any financial or…

Q: 7 A company owns an asset with an original cost of $300,000 and a current book value of $160,000.…

A: Impairment: It is often defined as a permanent decrease or fall in the value of the assets being…

Q: Youth Athletic Services (YAS) provides adult supervision for organized youth athletics. It has a…

A: Income Statement- An income statement is a financial statement that shows an organization's income…

Q: Prepare the journal entry to record the sale of the building after having used the cost model.…

A: Commercial organizations used journal entries to record their financial transactions in their…

Q: An asset used in a 4-year project falls in the 5-year MACRS class, for tax purposes. The asset has…

A: Book value= (purchase price)*(1-sum of MACR rates from beginning to current date)= 20349349 *(1-(20%…

Q: 2. Use (a) the percentage method and (b) the wage-bracket method to compute the federal income taxes…

A: Federal tax refers to the tax that is paid to the government. Every individual and corporation is…

Q: Madison Company acquired a depreciable asset at the beginning of Year 1 at a cost of $12 million. At…

A: Fair value less costs to sell = Fair value of the asset at 12/31/Y1 = $7.5 million Value in use =…

Q: Crane Inc. owns assets to which it applies the revaluation model (asset-adjustment method). The…

A: To determine the adjusted December 31, 2024 balance in the related contra-asset account, we need to…

Q: S9-9 Selling an asset at gain or loss Alpha Communication purchased equipment on January 1, 2018,…

A: Journal entry Cash a/c. Dr. Accumulated depreciation a/c. Dr. Cr…

Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

30. A building previously occupied by Grand Company
with a cost of P10 million and an accumulated
depreciation of P5.5 million is reclassified as
investment property. At the time of reclassification,
the building has a fair value of P5 million.
Using the fair value model, upon reclassification to
investment property, at what amount should Grand
record the investment property and what amount of
gain is recognized in profit or loss, respectively?
P4.5 million and P500,000
P5 million and PO
P5 million and P500,000
P4.5 million and PO

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Reclassification of Investment:

VIEW

Solution:

VIEW

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Please show your solution.
Easter Company’s 12/31/2021 statement of financial position reports assets of $5,000,000 and liabilities of $2,000,000. All of Easter’s assets’ book values approximate their fair value, except for land, which has a fair value that is $300,000 greater than its book value. On 12/31/2021, Wendell Corporation paid $5,100,000 to acquire Easter. Calculate the amount of goodwill Wendell should record as a result of this purchase.
1. A special manufacturing and handling device was purchased by Alfonso Manufacturing for $200,000 and is depreciated over MACRS. CFBT is estimated to amount to $800,000 for the first 2 years followed by $600,000 thereafter until the asset is retained. The effective tax rate, Te is 35% and interest is 10% per year. In present worth dollars determine the CFAT and determine if it was a viable purchase. (Note answer must be in a tabular format)
A fixed asset with a cost of $33,769.00 and accumulated depreciation of $30,392.10 is sold for $5,740.73. What is the amount of the gain or loss on disposal of the fixed asset? Select the correct answer. $2,363.83 gain $2,363.83 loss $3,376.90 loss $3,376.90 gain
Ef 362.
1. MadDog Inc. owns equipment for which it paid $85 million. At the end of 2020, it had accumulated depreciation on the equipment of $15 million. Due to adverse economic conditions, MadDog's management determined that it should assess whether an impairment loss should be recognized for the equipment. The estimated undiscounted future cash flows to be provided by the equipment total $55 million, and the equipment's fair value at that point is $40 million. a. Under these circumstances, determine if MadDog should record an impairment loss and if yes, in what amount. Clearly indicate the steps that led to your conclusion. b. Make the necessary journal entry to record the impairment loss. If you determined that no entry is necessary, write "No entry". c. How would your answer change if the estimated undiscounted future cash flows to be provided by the equipment total $85 million instead of $55 million?
V6. A company purchases land, building and equipment for $1,500,000. An independent appraisal shows that the best available indications of fair value at the time of purchase are: land: $760,000; building: $540,000; and equipment: $320,000. The purchase is financed through long-term debt. Required: Prepare the journal entry to record the purchase Prepare the journal entry to record the purchase:
A fixed asset with a cost of $25,974 and accumulated depreciation of $23,377 is traded for a similar asset priced at $40,828 (fair market value) in a transaction with commercial substance. Assuming a trade-in allowance of $4,683, the cost basis of the new asset is Select the correct answer. $43,425 $38,742 $40,828 $36,145
Presented below is information related to Wolfie Corp.’s equipment on 12/31/2022: Description Amount Capitalized cost $900,000 Accumulated depreciation to date 750,000 Estimated residual value 40,000 Expected future cash flows 125,000 Estimated Fair value 100,000 The amount of the impairment loss, if any, that Wolfie Corp. should record on 12/31/22 is: $45,000 $50,000 $10,000 $20,000 $25,000 There is no impairment.
17.On December 31, 20x1, the building of Borong Co. with a historical cost of #320,000,000, accumulated depreciation of #160,000,000, and an estimated useful life of 20 years was determined to have a fair value of $200,000,000. Borong Co. is subject to an income tax rate of 30%. Under the elimination method, the entry to record the revaluation includes a. a debit to accumulated depreciation for $160,000,000. b. a debit to accumulated depreciation for $40,000,000. c. a debit to building for $120,000,000. d. a credit to building for $160,000,000.
Godo