Ayayai Automotive is looking to expand its operations and has approached Dynatech Garage to acquire its business.Dynatech has agreed to sell if Ayayai assumes the mortgage on Dynatech's building as part of the sale. The fair value ofDynatech's identifiable assets and identifiable liabilities are: Inventory: 149000. Buildings: 949000. Land: 349000.Mortage payable (274000). Net identifiable assets: 1,173,000. Assuming Ayayai purchases the business for $Recordthe journal entry for the purchase by Ayayai Automotive. (If no entry is required, select "No entry" for the account titlesand enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indentmanually. List all debit entries before credit entries.) Account Titles Debit Credit 1,324,000

The objective of this question is to record the journal entry for the purchase of Dynatech Garage by…

Answered: Ayayai Automotive is looking to expand…

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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Central Purchasing Ltd. (CPL) owns the building it uses; it had an original cost of $8,096,000 and accumulated depreciation of $2,428,800 as of 1 January 20X2. On this date, the building (but not the land) was sold to a real estate Investment trust (REIT) for $7,596,000, which also was the building's fair value, and simultaneously leased back to CPL. The lease has a 15-year term and required payments on 31 December of each year. The payments are $646,000 with no transfer of title or purchase option. CPL will pay all of the building's operating and maintenance costs including property taxes and insurance. CPL's Incremental borrowing rate is 9%. The building is being depreciated straight-line with a full year's depreciation in the year of acquisition. (PV of $1, PVA of $1, and PVAD of $1.) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare entries for CPL to record the sale and leaseback of the building. (If no entry is required for a transaction/event, select "No…
What is the maximum price you would be willing to pay for the business? If an investor group purchased the restaurant near the campus for $255, 867 and the fair value of the assets they acquired was $202,000, identify the account along with its balance, that is used to record the additional amount paid over the fair value of the assets.
Arlington LLC exchanged land used in its business for some new land. Arlington orginally purchased the land for $30,000. The new land had a fair market value of $36,000. Arlington also received $4,000 of office equipment in the transaction. What is Arlington's gain or loss recognized on the exchange?
PEARS Company owned three investment properties. Details of the properties are as follows: (see photo)
OCD exchanged old realty for new like-kind realty. OCD’s adjusted basis in the old realty was $31,700 ($60,000 initial cost − $28,300 accumulated depreciation), and its FMV was $48,000. Because the new realty was worth only $45,000, OCD received $3,000 cash in addition to the new realty. Required: a-1. Compute OCD's realized gain. a-2. Determine the amount and character of any recognized gain. b. Compute OCD’s basis in its new realty.
Case A. Kapono Farms exchanged an old tractor for a newer model. The old tractor had a book value of $16,500 (original cost of $37,000 less accumulated depreciation of $20,500) and a fair value of $9,900. Kapono paid $29,000 cash to complete the exchange. The exchange has commercial substance. Case B. Kapono Farms exchanged 100 acres of farmland for similar land. The farmland given had a book value of $545,000 and a fair value of $790,000. Kapono paid $59,000 cash to complete the exchange. The exchange has commercial substance. Required: What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new land? Assume the fair value of the farmland given is $436,000 instead of $790,000. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new land? Assume the same facts as Requirement 1 and that the exchange lacked commercial substance. What is the amount of gain or loss that…
For intangible assets such as a franchise, what costs do you amorizite and how much do you capitalize? In the book it says that the franchisee capitalizes the initial cost it pays to acquire the franchise. So is that the $25,000 or the $85,000? Example: On Jan. 1, 2016 Tully signed an agreement to operate as a franchisee of Rapid Copy Service, for an initial fee of $85,000. Of this amount, $25,000 was paid when the agreement was signed, and the remaining is payable in 4 annual payments of $15,000 each beginning Jan.1, 2017. The agreement provides that the down payment is not refundabe and no future services are required of the franhcisor. The present value at Jan. 2, 2016, of the 4 annual payments discounted at a14% is $43,700. The agreement aslo provides that 5% of the revenue from the franchise must be paid to the franchisor annually. Tully's revenue from the franchise for 2016 was $900,000. Useful life of the franchise is estimated to be 10 years.
Give me correct answer with explanation.
Metro Corporation traded Building A for Building B. Metro originally purchased Building A for $50,000, and Building A's adjusted basis was $25,000 at the time of the exchange. What is Metro's realized gain or loss, recognized gain or loss, and adjusted basis in Building B in each of the following alternative scenarios? (Loss amounts should be indicated by a minus sign. Input all other amounts as positive values. Leave no answer blank. Enter zero is applicable.) c. The fair market value of Building A is $35,000, and Building B is valued at $40,000. Metro exchanges Building A and $5,000 cash for Building B. Building A and Building B are like-kind property. Description Amount (1) Amount realized from Building B (2) Amount realized from boot (cash) (3) Total amount realized $ (4) Adjusted basis (7) Deferred gain Adjusted basis in Building B
Red River Bakery purchases land, building, and equipment for a single purchase price of $260,000. However, the estimated fair values of the land, building, and equipment are $126,000, $198,000, and $36,000, respectively, for a total estimated fair value of $360,000. Required: Determine the amounts Red River should record in the separate accounts for the land, the building, and the equipment.
Sunland Homes Company is considering the acquisition of Oriole, Inc. early in 2025. To assess the amount, it might be willing to pay. Sunland Homes makes the following computations and assumptions. A B Oriole, Inc. has identifiable assets with a total fair value of $15,030,000 and liabilities of $8,815,000. The assets include office equipment with a fair value approximating book value, buildings with a fair value 30% higher than book value, and land with a fair value 75% higher than book value. The remaining lives of the assets are deemed to be approximately equal to those used by Oridle, Inc. Oriole, Inc's pretax incomes for the years 2022 through 2024 were $1,200,900, $1,500,800, and $955,000, respectively. Sunland Homes believes that an average of these earnings represents a fair estimate of annual earnings for the indefinite future. However, it may need to consider adjustments to the following items included in pretax eamings: Depreciation on buildings (each year) C 962,900…
Case B. Kapono Farms exchanged 100 acres of farmland for similar land. The farmland given had a book value of $520,000 and a fair value of $740,000. Kapono paid $54,000 cash to complete the exchange. The exchange has commercial substance. Required: What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new land? Assume the fair value of the farmland given is $416,000 instead of $740,000. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new land? Assume the same facts as Requirement 1 and that the exchange lacked commercial substance. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new land? Assume the same facts as Requirement 2 and that the exchange lacked commercial substance. Assume the fair value of the farmland given is $416,000 instead of $740,000. What is the amount of gain or loss that…

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