Bob Joseph is evaluating two recent trnsactions involving exchanges of industrial machinery. In one case, the exchange has commercial substances. In the second situation the exchange lacks commercial substnce. Explain to Bob the differences in accounting for these two-situations

Bob Joseph is evaluating two recent trnsactions involving exchanges of industrial machinery. In one case, the exchange has commercial substances. In the second situation the exchange lacks commercial substnce. Explain to Bob the differences in accounting for these two-situations

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter12: Nonrecognition Transactions

Section: Chapter Questions

Problem 11DQ

See similar textbooks

Similar questions

Stan Ott is evaluating two recent transactions involving exchanges of equipment. In one case, the exchange has commercial substance. In the second situation, the exchange lacks commercial substance. Explain to Stanthe differences in accounting for these two situations.
Requirements: a. Assume both Sawyer and Brown are new machine dealers and that the machines are still new. Also, assume that the exchange lacks commercial substance. At what amount will, Machine A be recorded on Brown’s books? b. Given the assumption in letter a, at what amount will Machine B be recorded on Sawyer’s books? c. Assume that instead of dealers, both Sawyer and Brown are machine manufacturers and use the machines in production. Assume the exchange lacks commercial substance. At what amount will Brown record machine A? d. Given the assumptions in C above, at what amount will Sawyer record Machine B? e. Given the assumption in no.3 above except in the fair values of Machines A and B are $504,000 and $450,000, respectively, at what amount will Brown record Machine A? f. Return to the original problem. Assume that Sawyer is a dealer selling new machines and that Brown is a manufacturer. Assume that the exchange has commercial substance. For this transaction, at what amount will…
Centennial Company developed a trademark to distinguish its products from those of the competitors. Through advertising and other means, the entity is seeking to establish significant product identification to increase future sales. The similarity between the trademark costs and other intangible and operating costs has caused some confusion over proper accounting. The following items are being treated as part of the cost of the trademark: Marketing research to study consumer tastes Design costs of trademark Legal fees of registering trademark Advertising to establish recognition of trademark Registration fee with Patent Office 400,000 1,500,000 150,000 200,000 50,000 What is the initial cost of the trademark?
Do not answer in image format. Maintain accuracy and quality in your answer. Answer completely.
How might your answers to the breach of contract litigation and the industrial espionage litigation change if Greenlaw used IFRS? Complete the statement below with regard to the breach-of-contract litigation. If an unfavorable outcome is probable and there exists a range of estimates with no amount in the range more likely than any other amount in the range, IFRS require that ___ of the range be used to measure the liability. Complete the statement below with regard to the industrial espionage litigation. With regard to the industrial espionage litigation, under IFRS Greenlaw would record a debit to ___ in the amount of ___ and a credit to .
2. Mr. Ahmed sold an item, which is damaged prior to delivery for an intention from seller's control, and then the buyer can: a) Pay the invoice amount and accept the goods b) Accept the goods and pay later c) Accept the goods, but sue for damages d) Rescind the contract
Recognize, whether CAMEX involved in international trade. Justify your answer based on one relevant theory.
When an entity's management resolves that the entity will offer to repair a defect it has recently discovered in one of its products, even though the nature of the defect is such that purchasers of the product would not expect the entity to do so: it must immediately recognise a liability. it must immediately recognise a liability, if it can be measured reliably. it will never recognise a liability as the offer to repair was not part of the contract of sale. it will only need to recognise a liability when the entity makes the offer public, or commits itself in some other way to make the repairs.
What does it mean to say that a trade was internalized at abroker-dealer?
Your answer is partially correct. Martinez Laboratories holds a valuable patent (No. 758-6002-1A) on a precipitator that prevents certain types of air pollution. Martinez does not manufacture or sell the products and processes it develops. Instead, it conducts research and develops products and processes which it patents, and then assigns the patents to manufacturers on a royalty basis. Occasionally it sells a patent. The history of Martinez patent number 758-6002-1A is as follows. Date Activity Cost 2016-2017 Research conducted to develop precipitator $382,000 Jan. 2018 Design and construction of a prototype 85,400 March 2018 Testing of models 57,400 Jan. 2019 Fees paid engineers and lawyers to prepare patent application; patent granted June 30, 2019 66,300 Nov. 2020 Engineering activity necessary to advance the design of the precipitator to the manufacturing stage 95,000 Dec. 2021 Legal fees paid to successfully defend precipitator patent 57,400 April 2022 Research aimed at modifying…
Two accounting students were discussing the timing of revenue recognition for long-term construction contracts.The discussion focused on which method was most like the typical revenue recognition method of recognizingrevenue at the point of product delivery. Bill argued that recognizing revenue upon project completion was preferable because it was analogous to recognizing revenue at the point of delivery. John disagreed and supportedrecognizing revenue over time, stating that it was analogous to accruing revenue as a performance obligation wassatisfied. John also pointed out that an advantage of recognizing revenue over time is that it provides informationsooner to users.Required:Discuss the arguments made by both students. Which argument do you support? Why?
In a paragraph or two, explain why constructive notice in international transactions can often be less effective when those transactions are completed online.