(a) What general rule should be applied to determine the amount at which the land should be recorded? (b) Under what circumstances should this transaction be recorded at the fair value of the land? (c) Under what circumstances should this transaction be recorded at the fair value of the stock issued? (d) Assume MC intentionally records this transaction at an amount greater than the fair value of the land and the stock. Discuss this situation
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- An entity accounted for land using the revaluation model. On October 1, 2020, the entity classified the land as held for sale. At that date, the carrying amount of the land was P5,000,000 and the balance in the revaluation surplus was P1,500,000. At the same date, the fair value of the land was estimated at P5,500,000. The estimated cost of disposal is P100,000. On December 31, 2020, the fair value less cost of disposal of the land did not change. On October 1, 2021, the land was sold for P7,000,000.What amount of OCI is classified to retained earnings in 2021? * 1,500,000 2,000,000 500,000 ZeroAn entity accounted for land using the revaluation model. On October 1,2020, the entity classified the land as held for sale. At that date, thecarrying amount of the land was P5,000,000 and the balance in therevaluation surplus was P1,500,000. At the same date, the fair value of theland was estimated at P5,500,000. The estimated cost of disposal isP100,000. On December 31, 2020, the fair value less cost of disposal ofthe land did not change. On October 1, 2021, the land was sold forP7,000,000.What amount of OCI is classified to retained earnings in 2021? A. 1,500,000B. 2,000,000C. 500,000D. ZeroThe property had been acquired on January 1, 2020 for a total of P7,600,000, made up of P6,900,000 paid to the vendor, P300,000 paid to the local authority as a property transfer reporting period. One investment property had a fair value investment property is fair value model at the end of each Paradise Company's accounting policy with respéct to reporting period. One investment property had a fair ch of P8,000,000 on December 31, 2020. The property had been acquired on January 1, 2020 for a tota of P7,600,000, made up of P6,900,000 paid to the vendo tax and P400,000 paid to professional advisers. The use life of the property is 40 years. What is the gain to be recognized for 2020 in respect of the investment property?
- On January 1, 2020, Single Company which uses the fair value model, purchases an investment property at a cost of P50,000,000. At December 31, 2020 the market value of the property is P60,000,000. The fair market value of the property on December 31, 2021 is P55,000,000. On January 1, 2022, the property was reclassified to property, plant and equipment. At what amount should the property, plant and equipment be initially recorded? * Note: ANSWER ONLYBelow are transactions related to Duffner Company. a. The City of Pebble Beach gives the company 5 acres of land as a plant site. The fair value of this land is determined to be $81,000. b. 13,000 shares of common stock with a par value of $50 per share are issued in exchange for land and buildings. The property has been appraised at a fair value of $810,000, of which $180,000 has been allocated to land and $630,000 to buildings. The stock of Duffner Company is not listed on any exchange, but a block of 100 shares was sold by a stockholder 12 months ago at $65 per share, and a block of 200 shares was sold by another stockholder 18 months ago at $58 per share. c. No entry has been made to remove from the accounts for Materials, Direct Labor, and Overhead the amounts properly chargeable to plant asset accounts for machinery constructed during the year. The following information is given relative to costs of the machinery constructed. Materials used $12,500 Factory…On January 1, 2019, ABC Company purchased land at a cost of P 6M. the entity used the revaluation model for this asset. The fair value of the land was P 7M on December 31, 2019 and P 8.5M on December 31, 2020. On July 1, 2021, the entity decided to sell the land and therefore classified the asset as held for sale. The fair value of the land on this date is P 9.6M. The estimated cost of disposal is P 300,000.On December 31, 2021, the land was sold for P 8M. How much is the net impact of the land held for sale on 2021 income statement? (indicate negative sign if loss)
- 1) On January 1, 2020, Harbor Company purchased land and building at a single cost of P20,000,000. On this date, it was determined that the land and building had a fair value of P18,000,000 and P7,000,000 respectively. The entity also incurred legal fees for purchase contract and recording ownership P200,000, and title guarantee insurance P100,000. The entity immediately demolished the building to make way for construction of a new building to be used as owner-occupied. The total contract price and other directly attributable cost to the building amounted to P15,000,000. The entity incurred demolition cost of P350,000. What is the initial cost of the land?On January 1, 2019, Intimate Corporation purchased land at a cost of P7,200,000. The entity used the revaluation model for this asset. The fair value of the land was P8,400,000 on December 31, 2019 and P10,200,000 on December 31, 2020. On July 1, 2021, the entity decided to sell the land and therefore classified the asset as held for sale. The fair value of the land on this date is P9,120,000. The estimated cost of disposal is almost zero. On December 31, 2021, the land was sold for P9,600,000. What amount of OCI should be recognized in the statement of comprehensive income for the year ended December 31, 2020? ₱480,000 ₱3,000,000 ₱1,080,000 ₱1,800,000 What amount of gain or loss on sale of land is recognized in 2021? ₱480,000 gain ₱2,400,000 gain ₱600,000 loss ₱1,200,000 gain What amount of OCI is transferred…8. Brown Company uses fair value model for its investment property. At December 31, 2021, the company has the following property items. Acquisition cost/Carrying value Fair value at Property item 12/31/21 10,000,000 5,000,000 Land held for future plant site Land held for a currently undetermined future use Land and building acquired under finance lease being used in operations. Building (30% of the space is owner occupied and the remainder is being leased to others under operating leases. Building being leased out under finance lease. Building being used by the company for its operations Building being leased out under operating lease Equipment being leased out under operating lease 12,500,000 6,500,000 14,000,000 15,000,000 12,000,000 10,000,000 8,500,000 9,000,000 7,900,000 3,500,000 6,500,000 7,000,000 1,700,000 2,200,000 What is the correct total of investment property reported'by Brown Company at December 31, 2021?
- On April 30, 2020, Mindful Company classifies a property in Southern Tagalog as held for sale. The carrying amount of the property on this date is P300,000,000 (cost of P400,00,000, accumulated depreciation of P60,000,000 and accumulated impairment loss of P40,000,000). The estimate of the fair value less cost to sell on this date is P280,000,000. On December 31, 2020, the estimate of the fair value less cost sell is P350,000,000. The sudden increase in the fair value is attributed to the increases in demand for properties in Southern Tagalog, when the region is earmarked as the Philippine Development Region by the government as the next phase for economic growth. What is the amount of impairment loss on April 30, 2020? What is the amount of impairment loss reversal on December 31, 2020?Below are transactions related to Martinez Company. The City of Pebble Beach gives the company 5 acres of land as a plant site. The fair value of this land is determined to be $87,350. (a) 13,000 shares of common stock with a par value of $55 per share are issued in exchange for land and buildings. The property has been appraised at a fair value of $873,500, of which $175,190 has been allocated to land and $698,310 to buildings. The stock of Martinez Company is not listed on any exchange, but a block of 100 shares was sold by a stockholder 12 months ago at $71 per share, and a block of 200 shares was sold by another stockholder 18 months ago at $63 per share. (b) No entry has been made to remove from the accounts for Materials, Direct Labor, and Overhead the amounts properly chargeable to plant asset accounts for machinery constructed during the year. The following information is given relative to costs of the machinery constructed. (c) Materials used $11,300 Factory supplies used 846…Below are transactions related to Martinez Company. The City of Pebble Beach gives the company 5 acres of land as a plant site. The fair value of this land is determined to be $87,350. (a) 13,000 shares of common stock with a par value of $55 per share are issued in exchange for land and buildings. The property has been appraised at a fair value of $873,500, of which $175,190 has been allocated to land and $698,310 to buildings. The stock of Martinez Company is not listed on any exchange, but a block of 100 shares was sold by a stockholder 12 months ago at $71 per share, and a block of 200 shares was sold by another stockholder 18 months ago at $63 per share. (b) (c) No entry has been made to remove from the accounts for Materials, Direct Labor, and Overhead the amounts properly chargeable to plant asset accounts for machinery constructed during the year. The following information is given relative to costs of the machinery constructed. Materials used $11,300 Factory supplies used 846…