Cat Corporation is 80% owned by Dog Inc. On January 1, 2014, Cat Corporation paid P100,000 for a truck with an expected economic life of 10 years and no residual value. Cat Corp sold the track to Dog Inc. on January 1, 2020. During the preparation of the consolidated working paper for 2020, the following working paper entry was made to eliminate the effects of the intercompany truck sale: Truck- 48,000 Gain on sale of truck - 12,000 Accumulated Depreciation - 60,000 What amount of depreciation expense was recorded by Dog Inc. during 2020? a.10,000 b. 13,000

Cat Corporation is 80% owned by Dog Inc. On January 1, 2014, Cat Corporation paid P100,000 for a truck with an expected economic life of 10 years and no residual value. Cat Corp sold the track to Dog Inc. on January 1, 2020. During the preparation of the consolidated working paper for 2020, the following working paper entry was made to eliminate the effects of the intercompany truck sale: Truck- 48,000 Gain on sale of truck - 12,000 Accumulated Depreciation - 60,000 What amount of depreciation expense was recorded by Dog Inc. during 2020? a.10,000 b. 13,000

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter11: Depreciation, Depletion, Impairment, And Disposal

Section: Chapter Questions

Problem 14P: Hunter Company purchased a light truck on January 2, 2019 for 18,000. The truck, which will be used...

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Hunter Company purchased a light truck on January 2, 2019 for 18,000. The truck, which will be used for deliveries, has the following characteristics: Estimated life: 5 years Estimated residual value: 3,000 Depreciation method for financial statements: straight-line method Depreciation for income tax purposes: MACRS (3-year life) From 2019 through 2023, each year, Hunter had sales of 100,000, cost of goods sold of 60,000, and operating expenses (excluding depreciation) of 15,000. The truck was disposed of on December 31, 2023, for 2,000. Required: 1. Prepare an income statement for financial reporting through pretax accounting income for each of the 5 years, 2019 through 2023. 2. Prepare, instead, an income statement for income tax purposes through taxable income for each of the 5 years, 2019 through 2023. 3. Compare the total income for all 5 years under Requirements 1 and 2.
On January 1, 200A, ABC Company sells to XYZ, a used transportation equipment, which was acquired at P800,000, 5 years ago. The carrying value of the equipment is P500,000. There is no established selling price for the equipment. Upon executing the sale, ABC received P100,000 down payment and a non-interest bearing promissory note which gives the holder the right to collect 150,000 annually starting December 200A until December 200C, when the interest rate prevailing in the market is 11%. At the end of December 200A, the carrying value of the current portion of note receivable is (Round off the resulting present value of the note to the nearest hundreds.)
PROBLEM: On December 31, 2019, FJ Company sold for P2,400,000 an old equipment having an original cost of P4,320,000 and carrying amount of P1,920,000. The terms of the sale were P480,000 down payment and P960,000 payable on December 31 of the next two years. The sale agreement made no mention of interest. However, 9% would be a fair rate for this type of transaction. Compute for the following: a) Gain/Loss on sale of equipment (Specify if gain or loss.) b) Interest income for 2020 c) Carrying amount of the note receivable on December 31, 2020.
On January 1, 200A, ABC Company sells to XYZ, a used transportation equipment, which was acquired at P800,000, 5 years ago. The carrying value of the equipment is P500,000. There is no established selling price for the equipment. Upon executing the sale, ABC received P100,000 down payment and a 12% promissory note which gives the holder the right to collect 150,000 annually starting December 200A until December 200C, when the interest rate prevailing in the market is 13%. At the end of December 200A, the carrying value of the noncurrent portion of note receivable is
On January 1, 200A, ABC Company sells to XYZ, a used transportation equipment, which was acquired at P800,000, 5 years ago. The carrying value of the equipment is P500,000. There is no established selling price for the equipment. Upon executing the sale, ABC received P100,000 down payment and a 12% promissory note which gives the holder the right to collect 150,000 annually starting December 200A until December 200C, when the interest rate prevailing in the market is 13%. The initial amount of the note receivable is (Round off the resulting present value of the note to the nearest hundreds.)
On June 1, 2021, Startlet Company approved a plan to dispose of a business segment. It is expected that the sale will occur on April 30, 2022. On December 31, 2021, the carrying value of net assets of the segment was P4,000,000 and the net recoverable amount was P3,600,000. During 2021, the company paid employees severance and relocation costs of P200,000 as a direct result of the discontinuing operation. The revenues and expenses of the discontinuing segment during 2021 were: Period covered Revenue January 1 to May 31 June 1 to December 31 P3,000,000 1,400,000 Expenses P4,000,000 1,800,000 Income tax rate is 35%. What amount should be reported as loss from discontinued operation for 2021? Your answer
On July 15, 2021, Cottonwood Industries sold a patent and equipment to Roquemore Corporation for $910,000 and $405,000, respectively. On the date of the sale, the book value of the patent was $ $200,000, and the book value of the equipment was $496,000 (cost of $726,000 less accumulated depreciation of $230,000) Prepare the journal entries to record the sales of the patent and equipment 1 2 Record the sale of the patent for $910,000. On the date of the sale, the book value of the patent was $200,000.
Canada Company purchased a machine at an invoice price of P4,500,000 with terms 2/10, n/30. The entity paid the required amount for the machine beyond the discount period. The entity paid P80,000 for delivery of the machine and P310,000 for installation and testing. The machine was ready for use on January 1, 2019. It was estimated that the machine would have a useful life of 5 years and a residual value of P800,000. Engineering estimated indicated that the useful life of productive units was 200,000. Units actually produced during the first two years were 30,000 in 2019 and 48,000 in 2020. The entity decided to use the output method of depreciation. What is the accumulated depreciation of the machine on December 31, 2020? A. 1,560,000 B. 1,600,000 C. 960,000 D. 600,000
On October 1, 2021, Loving Company approved a formal plan to sell a businesssegment. The sale will occur on April 1, 2022. The segment’s revenue andexpenses for 2021 were P30,000,000 and P32,000,000, respectively. OnDecember 31, 2021, the carrying amount of the assets of the segment wasP10,000,000 and the fair value less costs of disposal was P9,600,000. Theincome tax rate is 25%. What amount should be reported as income/(loss) fromdiscontinued operation for 2021?
On July 15, 2021, Cottonwood Industries sold a patent and equipment to Roque more Corporation for $910,000 and $405,000, respectively. On the date of the sale, the book value of the patent was $ $200,000, and the book value of the equipment was $496,000 (cost of $726,000 less accumulated depreciation of $230,000) Prepare the journal entries to record the sales of the patent and equipment < 1 2 Record the sale of the equipment for $405,000. On the date of the sale, the book value of the equipment was $496,000 (cost of $726,000 less accumulated depreciation of $230,000). Note: Enter debits before credits. Event 2 General Journal Debit Credit
On July 2, 2020, Covenant Construction London’s area’s dedicated general contractorpurchased a 312GR Skid Steer (i.e., construction equipment).Covenant traded in equipment with a book valueof $2,000 (initial cost $40,000) and paid $50,035in cashone month after the purchase. The old equipment could have been sold for $9,535 at the date of the trade but was accepted for trade-in allowance of $9,500 on the new equipment. Required:a)Prepare alljournal entriesyou consider necessaryrelating to the above information.Round to the nearest dollar.
Nona Co. purchased land worth P20,000,000 on January 1, 2021. The company uses the revaluation model in accounting for its PPE. On December 31, 2021, an independent appraiser valued the land at P43,000,000. But on December 31, 2022, the land had a fair value of P8,000,000. How much revaluation deficit/impairment loss should be recognized in the income statement on December 31, 2022?