Acme Corp.
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On January 3, 2020, Acme Corp. owned a machine that had cost P300,000. The
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- The Siri Company acquired equipment on January 1, 2015 at a cost of P400,000, depreciating it over 8 years with a nil residual value. On January 1, 2018. The Triss Company acquired 100% of Siri and estimated the fair value of the equipment at P230,000 with a remaining life of 5 years. This fair value was not incorporated into Siri’s books and the depreciation expense continued to be calculated by reference to original cost. What adjustments should be made to the depreciation expense for the year and the statement of financial position carrying amount in preparing the consolidated financial statements for the year ended December 31, 2019? DEPRECIATION EXPENSE -decrease by P4,000 ; CARRYING AMOUNT - decreased by P12,000 DEPRECIATION EXPENSE -decreased by P4,000 ; CARRYING AMOUNT - increased by P12,000 DEPRECIATION EXPENSE -increase by P4,000 ; CARRYING AMOUNT - decreased by P12,000 DEPRECIATION EXPENSE…On November 4, 2019, Blue Company acquired an asset (27.5-year residential real property) for $200,000 for use in its business. In 2019 and 2020, respectively, Blue deducted $642 and $5,128 of cost recovery. These amounts were incorrect; Blue applied the wrong percentages (i.c., those for 39 year rather than 27.5 year assets). Blue should have taken $910 and $7,272 cost recovery in 2019 and 2020, respectively. On January 1, 2021, the asset was sold for $180,000. If required, round all computations to the nearest dollar. Click here to access the depreciation tables in the textbook. a. The adjusted basis of the asset at the end of 2020 is $ b. The cost recovery deduction for 2021 is $ c. The loss on the sale of the asset in 2021 isShamrock Inc. owns equipment that cost $605,000 and has accumulated depreciation of $157,000. The expected future net cash flows from the use of the asset are expected to be $400,000. The fair value of the equipment is $346,000. Prepare the journal entry, if any, to record the impairment loss. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit
- Wildhorse Corporation purchased a machine on January 2, 2020, for $4900000. The machine has an estimated 5-year life with no salvage value. The straight-line method of depreciation is being used for financial statement purposes and the following MACRS amounts will be deducted for tax purposes: 2020 2021 2022 $980000 1568000 940800 O $83300 O $7840 2023 O SO O $117600 2024 2025 Assuming an income tax rate of 20% for all years, the net deferred tax liability that should be reflected on Wildhorse's balance sheet at December 31, 2021 be $563500 563500 284200Oriole Corporation purchased a machine on January 2, 2020, for $4300000. The machine has an estimated 5-year life with no salvage value. The straight-line method of depreciation is being used for financial statement purposes and the following MACRS amounts will be deducted for tax purposes: 2020 $860000 2023 $494500 2021 1376000 2024 494500 2022 825600 2025 249400 Assuming an income tax rate of 20% for all years, the net deferred tax liability that should be reflected on Oriole's balance sheet at December 31, 2021 be $103200 $73100 $0 $68805
- Wednesday Company purchased equipment for P8,000,000 on January 1, 2023 with a useful life of 10 years and no residual value. on December 31, 2024, Wednesday classified the equipment as held for sale. The fair value of the equipment on December 31, 2024 was P6,000,000 and the cost of disposal P200,000. On December 31, 2025, Wednesday believed that the criteria for classification as held for sale can no longer be met. On such date, the fair value of the equipment was P5,000,000 and the cost of disposal was P100,000. The value in use was determined to be P5,500,000. Accordingly, the entity decided not to sell the asset but to continue to use it. What is the impairment loss to be recognized on December 31, 2024?Wildhorse, Inc. purchased equipment in 2024 for $901000. Two years later it became apparent to Wildhorse that this equipment had suffered an impairment of value. In early 2026, the book value of the asset is $585000 and it is estimated that the fair value is now only $359000. The entry to record the loss on impairment is O No entry is necessary as a write-off violates the historical cost principle. Retained Earnings 226000 Reserve for Loss on Impairment. Loss on Impairment Accumulated Depreciation-Equipment Retained Earnings Accumulated Depreciation-Equipment 226000 226000 226000 226000 226000Windsor Company owns equipment that cost $972,000 and has accumulated depreciation of $410,400. The expected future net cash flows from the use of the asset are expected to be $540,000. The fair value of the equipment is $432,000.Prepare the journal entry, if any, to record the impairment loss. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount
- Corning Industries owns a patent for which it paid $77,000. At the end of the current year, accumulated amortization on the patent totaled $14,000. Due to adverse economic conditions, Corning’s management determined that it should assess whether an impairment loss should be recognized for the patent. The estimated undiscounted future cash flows to be provided by the patent total $45,000, and the patent's fair value is $30,000. (a) What is the amount of the impairment loss, if any, on the patent at the end of the current year? (b) What is the book value of the patent after any impairment loss is recorded?On December 31, 2021, a machine owned by SLP COMPANY was destroyed by a fire. SLP COMPANY incurred removal and clean-up costs of P40,000. The machine had a book value of P450,000 and a fair value of P510,000 at the time of the fire. The machine was insured “new to old” and was replaced by the insurance company with a new one currently selling at P560,000. The loss due to fire to be reported in the 2021 income statement isGreg Company was granted a patent on January 1, 2017 and appropriately capitalized P 450,000 of related costs. The entity was amortizing the patent over the useful life of 15 years, During 2020, the entity paid P 150,000 in legal costs in successfully defending an attempted infringement of the patent. After the legal action was completed, the entity sold the patent to the plaintiff for P 750,000. The policy is to take no amortization in the year of disposal. The entry to record the sale of patent in 2020:
