Need help with this financial accounting question A company bought the new heating system for $130,000 and wasgiven a trade-in of $87,000 on an old heating system, so thecompany paid $43,000 cash with the trade-in. The old system hadan original cost of $120,000 and accumulated depreciation of$48,000.If the transaction has commercial substance, the company shouldrecord the new heating system at .

Step 1: Define Fixed AssetsFixed assets have a debit balance and we show fixed assets on one side of…

Answered: A company bought the new heating system…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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7. A company operates a mine in a country where legislation requires that the owner must restore the site on completion of its mining operations. The cost of restoration includes the replacement of the overburden, which must be removed before mining operations commence. A provision for the costs to replace the overburden was recognized as soon as the overburden was removed. The amount provided was recognized as part of the cost of the mine and is being depreciated over the mine's useful life. The carrying amount of the provision for restoration costs is P500,000, which is equal to the present value of the restoration costs.
As a result of the transaction, what is the effect on the profit or loss? what is the cost of the new asset acquired? with computations
2. Prepare the journal entries that Garrett should make to value its property, plant, and equipment under IFRS on December 31. General Journal Instructions PAGE 10 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 2 3 4 5 6. 7 8
BTS Company has some old equipment that cost P700,000 with an accumulated depreciation of P400,000. The equipment was traded in for a new machine from a dealer company that had a list price of P800,000; however, the new machine could be purchased without trade in for P780,000 cash. BTS Company paid P500,000 cash in the exchange.Determine the following: (1) Initial cost of the newly acquired equipment(2) Gain or loss on exchange
On September 30, 2020 AssetsToGo Company (ATG) agreed to an exchange of assets with another company. ATG gave up a machine with an original cost of $50,000. $30,000 in accumulated depreciation had been recorded on this machine over the course of ATG’s ownership. ATG determined that the machine being given up had a fair value of $18,000. ATG also paid $7,000 in cash. Assume that ATG follows IFRS and that the transaction has commercial substance.You have recently been hired in the accounting department of ATG and are preparing the entries to record the exchange of assets. What is the net carrying value of the machine on September 30, 2020 immediately prior to the exchange on ATG’s books? What is the total cost to ATG of the…
On September 30, 2020 AssetsToGo Company (ATG) agreed to an exchange of assets with another company. ATG gave up a machine with an original cost of $50,000. $30,000 in accumulated depreciation had been recorded on this machine over the course of ATG’s ownership. ATG determined that the machine being given up had a fair value of $18,000. ATG also paid $7,000 in cash. Assume that ATG follows IFRS and that the transaction has commercial substance.You have recently been hired in the accounting department of ATG and are preparing the entries to record the exchange of assets. What is the net carrying value of the machine on September 30, 2020 immediately prior to the exchange on ATG’s books? What is the total cost to ATG of the…
At the beginning of the current year, JKL Company purchased a mineral mine for P26,400,000 with removable ore estimated at 1,200,000 tons. After it has extracted all the ore, the entity will be required by law to restore the land to its original condition at an estimated cost of P2,100,000. The present value of the estimated restoration cost is P1,800,000. The entity believed that it will be able to sell the property afterwards for P3,000,000. During the current year, the entity incurred P3,600,000 of development cost preparing the mine for production, removed 80,000 tons of ore and sold 60,000 tons. Determine the total amount of depletion should be recorded for the current year. 1,920,000 b. 1,440,000 c. 1,940,000 d. 1,455,000
China Inn and Midwest Chicken exchanged assets. Midwest Chicken received equipment and gave a delivery truck. The fair value and book value of the delivery truck given were $31,000 and $32,600 (original cost of $37,000 less accumulated depreciation of $4,400), respectively. To equalize market values of the exchanged assets, Midwest Chicken received $9,000 in cash from China Inn. At what amount did Midwest Chicken record the equipment? How much gain or loss did Midwest Chicken recognize on the exchange?
Goodman Company exchanges an asset with The Pryce Corporation. Details of the exchange are as follows: Goodman’s Piece of equipment: Pryce’s building: Cost $800,000 Cost $960,000 Accumulated depreciation 230,000 Accumulated depreciation 350,000 Fair value 700,000 Fair value 850,000 Required- Prepare the journal entry in the books of both Goodman and Pryce, assuming both are public companies. Assume now that Goodman paid $80,000 in this transaction. Record the appropriate journal entry in Goodman books. Repeat b) assuming now that Goodman is a private company and that the fair value of Pryce’s building is the most determinable fair value.
Samtech Manufacturing purchased land and a building for $4 million. In addition to the purchase price, Samtech made the following expenditures in connection with the purchase of the land and building: Title insurance Legal fees for drawing the contract Pro-rated property taxes for the period after acquisition State transfer fees An independent appraisal estimated the fair values of the land and building, if purchased separately, at $3.2 and $1.8 million, respectively. Shortly after acquisition, Samtech spent $92,000 to construct a parking lot and $50,000 for landscaping. Required: 1. Determine the initial valuation of each asset Samtech acquired in these transactions. 2. Determine the initial valuation of each asset, assuming that immediately after acquisition, Samtech demolished the building. Demolition costs were $350,000 and the salvaged materials were sold for $6,000. In addition, Samtech spent $89,000 clearing and grading the land in preparation for the construction of a new…
ABC Co. is acquiring XYZ Inc. XYZ has the following intangible assets: Customer list with an observable fair value of $45,000 Identifiable research and development costs of $150,000 A 5-year operating lease with favorable terms having a discounted present value of $6,000. Patent on a product that is deemed to have no useful life $15,000. ABC will record how much for acquired Intangible Assets from the purchase of XYZ Inc?
A company’s old machine that cost $60,000 and had accumulated depreciation of $24,000 was traded in on a new machine having an estimated 20-year life with a fair value of $70,000. The company also paid $50,000 each, along with its old machine to acquire the new machine. If this transaction has commercial substance, the new machine should be recorded ata. $47,000b. $70,000c. $120,000d. $186,000

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