Anak Mami Berhad owns a factory which sits on freehold land. The factory produces metal works for hawker stalls since Merdeka. The factory was revalued ten years ago and is being depreciated over 50 years from that value. The company made one nasi kandar stall lines many years ago and today the meta used is toxic. Anak Mami expects a nasi kandar stall owner in Sungai Petani will take logal action - gainst them No montion was

Anak Mami Berhad owns a factory which sits on freehold land. The factory produces metal works for hawker stalls since Merdeka. The factory was revalued ten years ago and is being depreciated over 50 years from that value. The company made one nasi kandar stall lines many years ago and today the meta used is toxic. Anak Mami expects a nasi kandar stall owner in Sungai Petani will take logal action - gainst them No montion was

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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2. A warehouse owned by Martha and used in her business (i.e., to store inventory) is being condemned by the city to provide a right-of-way for a highway. The warehouse has appreciated by $180,000 based on Martha’s estimate of its fair market value. In the negotiations, the city is offering $35,000 less than what Martha believes the property is worth. Alan, a real estate broker, has offered to purchase Martha’s property for $20,000 more than the city’s offer. Martha plans to invest the proceeds she will receive in an office building she will lease to various tenants. Identify the relevant tax issues for Martha. Would the answer in part (1) change if Martha’s warehouse was property being held for investment rather than being used in her business? Explain.
hawler is a small manufacturing company specialising in making alloy casings. its main item of plant is a furnace which was purchased on 1 october 20x1. the furnace has two components: the main body (cost $60,000 including the environmental provision – see below) which has a ten-year life, and a replaceable liner (cost $10,000) with a five-year life. the manufacturing process produces toxic chemicals which pollute the nearby environment. legislation requires that a clean-up operation must be undertaken by shawler on 30 september 20y1 (ten years after 20x1) at the latest. shawler received a government grant of $12,000 relating to the cost of the main body of the furnace only. the following are extracts from shawler's statement of financial position as at 30 september 20x3 (two years after the acquisition of the furnace). carrying amount $ non-current assets furnace: main body 48,000 replaceable liner 6,000 current liabilities government grant 1,200 non-current liabilities government…
Several months ago, Ayers Industries Inc. experienced a hazardous materials spill at one of its plants. As a result, the Environmental Protection Agency (EPA) fined the company $248,000. The company is contesting the fine. In addition, an employee is seeking $213,000 in damages related to the spill. Lastly, a homeowner has sued the company for $324,000. The homeowner lives 35 miles from the plant but believes that the incident has reduced the home’s resale value by $324,000. Ayers’ legal counsel believes that it is probable that the EPA fine will stand. In addition, counsel indicates that an out-of-court settlement of $130,000 has recently been reached with the employee. The final papers will be signed next week. Counsel believes that the homeowner’s case is much weaker and will be decided in favor of Ayers. Other litigation related to the spill is possible, but the damage amounts are uncertain. Required: a. Journalize the contingent liabilities associated with the…
Pharoah Inc. recently replaced a piece of automatic equipment at a net price of $4,030, f.o.b. factory. The replacement was necessary because one of Pharoah’s employees had accidentally backed his truck into Pharoah’s original equipment and made it inoperable. Because of the accident, the equipment had no resale value to anyone and had to be scrapped. Pharoah’s insurance policy provided for a replacement of its equipment and paid the price of the new equipment directly to the new equipment manufacturer, minus the deductible amount paid to the manufacturer by Pharoah. The $4,030 that Pharoah paid was the amount of the deductible that it has to pay on any single claim on its insurance policy. The new equipment represents the same value in use to Pharoah. The used equipment had originally cost $65,800. It had a book value of $46,600 at the time of the accident and a second-hand market value of $52,730 before the accident, based on recent transactions involving similar equipment. Freight…
Vinson Co is being sued for illness caused to local residents as a result of negligence on the company's part in permitting the local residents to be exposed to highly toxic chemicals from its plant. Vinson's lawyer states that it is probable that Vinson will lose the suit and be found liable for a judgment costing Vinson anywhere from $600,000 to $3,000,000. However, the lawyer states the most probable cost is $1,800,000. As a result of these facts, Vinson should accrue: O a loss contingency of $600,000 and disclose an additional contingency of up to $2,400,000 O a loss contingency of $1.800,000 and disclose an additional contingency of up to $1,200,000 O a loss contingency of $1.800.000 but NOT disclose any additional contingency. O no loss contingency but disclose a contingency of $600,000 to $3.000.000
Several months ago, Jones Company experienced a spill of hazardous materials into the White River from one of its plants. As a result, the Environmental Protection Agency (EPA) fined the company $405,000. The company contested the fine. In addition, an employee is seeking $180,000 damages related to the spill. Finally, a homeowner has sued the company for $260,000. Although the homeowner lives 30 miles downstream from the plant, he believes that the spill has reduced his home’s resale value by $260,000. Jones’ legal counsel believes the following will happen in relationship to these incidents: (a) It is probable that the EPA fine will stand. (b) An out-of-court settlement for $165,000 has recently been reached with the employee, with the final papers to be signed next week. (c) Counsel believes that the homeowner’s case is weak and will be decided in favor of Jones Company. (d) Other litigation related to the spill is possible, but the damage amounts are uncertain. …
Superb Corporation is being sued for illness caused to local residents as a result of negligence on the company's part in permitting the local residents to be exposed to highly toxic chemicals from its plant. Superb's lawyer states that it is probable that Superb will lose the suit and be found liable for a judgment costing Superb anywhere from $1,200,000 to $6,000,000. However, the lawyer states that the most probable cost is $3,600,000. As a result of the above facts, Superb should accrue Select one: а. no loss contingency but disclose a contingency of $1,200,000 to $6,000,000. O b. a loss contingency of $1,200,000 and disclose an additional contingency of up to $4,800,000. Ос. a loss contingency of $3,600,000 but not disclose any additional contingency. O d. a loss contingency of $3,600,000 and disclose an additional contingency of up to $2,400,000.
Furnaces Pty Ltd was advised by a local building inspector that one of the chimneys on its premises was unsafe and, unless it was repaired, the factory would have to be closed. Furnaces decided that it was not feasible to stop operations to repair the chimney, so they gained permission to build an alternative chimney adjacent to the old chimney, thereby allowing production to continue. They found that although the new chimney was substantially the same size and make as the old one, it was cheaper to build than it would have been to repair the old one. Also, the new chimney can better ventilate the weather, which was not available in the previous one. After the new chimney was erected, the old chimney was demolished. Is any amount allowable as a deduction for the cost of the new chimney?
Several months ago, Ayers Industries Inc. experienced a hazardous materials spill at one of its plants. As a result, the Environmental Protection Agency (EPA) fined the company $276,000. The company is contesting the fine. In addition, an employee is seeking $202,000 in damages related to the spill. Finally, a homeowner has sued the company for $318,000. The homeowner lives 35 miles from the plant but believes that the incident has reduced the home’s resale value by $318,000.Ayers’ legal counsel believes that it is probable that the EPA fine will stand. In addition, counsel indicates that an out-of-court settlement of $130,000 has recently been reached with the employee. The final papers will be signed next week. Counsel believes that the homeowner’s case is much weaker and will be decided in favor of Ayers. Other litigation related to the spill is possible, but the damage amounts are uncertain.Required:a. On December 31, journalize the contingent liabilities associated with the…
Several months ago, Ayers Industries Inc. experienced a hazardous materials spill at one of its plants. As a result, the Environmental Protection Agency (EPA) fined the company $470,000. The company is contesting the fine. In addition, an employee is seeking $540,000 in damages related to the spill. Lastly, a homeowner has sued the company for $300,000. The homeowner lives 30 miles from the plant, but believes that the incident has reduced the home's resale value by $300,000. Ayers’ legal counsel believes that it is probable that the EPA fine will stand. In addition, counsel indicates that an out-of-court settlement of $230,000 has recently been reached with the employee. The final papers will be signed next week. Counsel believes that the homeowner's case is much weaker and will be decided in favor of Ayers. Other litigation related to the spill is possible, but the damage amounts are uncertain. a. Journalize the contingent liabilities associated with the hazardous materials…
Swifty Corporation is being sued for illness caused to local residents as a result of negligence on the company's part in permitting the local residents to be exposed to highly toxic chemicals from its plant. Swifty's lawyer states that it is probable that Swifty will lose the suit and be found liable for a judgment costing Swifty anywhere from $ 1830000 to $ 8960000. However, the lawyer states that the most probable cost is $ 5410000. As a result of the above facts, Swifty should accrue a loss contingency of $ 1830000 and disclose an additional contingency of up to $ 7130000. a loss contingency of $ 5410000 and disclose an additional contingency of up to $ 3550000. no loss contingency but disclose a contingency of $ 1830000 to $ 8960000. a loss contingency of $ 5410000 but not disclose any additional contingency.
Jim Reed manages a fleet of utility trucks for a rural county government. He’s been in his job for 30 years, and he knows where the angles are. He makes sure that when new trucks are purchased, the residual value is set as low as possible. Then, when they become fully depreciated, they are sold off by the county at residual value. Jim makes sure his buddies in the construction business are first in line for the bargain sales, and they make sure he gets a little something back. Recently, a new county commissioner was elected with vows to cut expenses for the taxpayers. Unlike other commissioners, this man has a business degree, and he is coming to visit Jim tomorrow. Requirements When a business sells a fully depreciated asset for its residual value, is a gain or loss recognized? How do businesses determine what residual values to use for their various assets? Are there “hard and fast” rules for residual values? How would an organization prevent the kind of fraud depicted here?