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- Llungby AB spent 1,000,000 krone in 2017 on the development of a new product. The company determined that 25 percent of this amount was incurred after the criteria in IAS 36 for capitalization as an intangible asset had been met. The newly developed product is brought to market in January 2018 and is expected to generate sales revenue for five years. Assume that a foreign company using IFRS is owned by a company using U.S. GAAP. Thus, IFRS balances must be converted to U.S. GAAP to prepare consolidated financial statements. Ignore income taxes. Required: Prepare journal entries for development costs for the years ending December 31, 2017, and December 31, 2018, under (1) IFRS and (2) U.S. GAAP. Prepare the entry(ies) that the U.S. parent would make on the December 31, 2017, and December 31, 2018, conversion worksheets to convert IFRS balances to U.S. GAAP.Rain Company traded a manual weather machine for an automated weather machine and gave $40,000 cash. The manual machine cost $495,000, had a net book value of $350,000, and a fair value of $360,000. The automated machine was originally purchased by Shine Company for $510,000 and had a net book value of $430,000. It has a fair market value of $450,000. Determine the value of the asset received for Rain and Shine assuming the exchange does not have commercial substance. Please include the appropriate dollar sign and commas (example $25,000).China Inn and Midwest Chicken exchanged assets. China Inn received delivery equipment and gave restaurant equipment. The fair value and book value of the restaurant equipment were $21,500 and $11,800 (original cost of $44,000 less accumulated depreciation of $32,200), respectively. To equalize market values of the exchanged assets, China Inn paid $8,900 in cash to Midwest Chicken. Record the gain or loss for China Inn on the exchange of the equipment. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)
- A machine costing P120,000, with accumulated depreciation of P95,000, with a fair market value of P27,500, was exchanged for a new machine with a fair value of P135,000 and the proper amount of cash is paid. The exchange has commercial substance. The new machine is to be recorded at what amount?Suppose that fabulous had purchased trucks for $400,000 which were used solely in the transportation of inventory purchased in different parts of the united states to U.S. customers. all transportation expenses, including depreciation deductions of $200,000 in respect of the trucks, were applied to reduce U.S.-source income. Fabulous then resells the used trucks for $410,000, thereby realizing income of $210,000, to a foreign purchaser that took title to the trucks in Peru. What is the source of the income realized on the sale of the trucks?The following previously unreported intangible assets were acquired by a U.S. company in a business combination. Their beginning-of- current-year book values and allocation to reporting units are listed below. Trade names Distribution network Goodwill Trade names Distribution network Reporting Unit #1 Reporting Unit #2 $14,000 Both identifiable intangibles have a 5-year remaining life. Information for year-end impairment testing is as follows: Sum of Expected Sum of Expected Future Undiscounted Future Discounted Cash Flows Cash Flows 70,000 Select one: O a. $7,700 O b. $5,040 C. $9,240 d. $7,000 $11,200 56,000 $12,600 8,400 O Information for year-end goodwill impairment testing is as follows: Reporting Reporting Unit #1 Unit #2 Fair value Book value before year-end adjustments for identifiable intangible amortization and impairment charges $10,500 7,000 $47,600 49,000 $36,400 For consolidation eliminating entry (O), what amount will be reported as expense for identifiable intangibles…
- Consider each of the independent transactions below: a) The University of Belize traded an older version vehicle with a newer model at Bravo Motors. The initial cost of the older version was $50,000 and accumulated depreciation up to the time of trading, was $41,000. The fair value at the time is $13,000. As part of the trading, the University paid $42,000 in cash. b) Jacky's Car Rentals traded a piece of land for a vehicle from Ozark Company. The fair values of the land and the vehicle are $75,000 and $49,000 respectively. Jacky received $26,000 to complete the transaction. Required: Assume you provide accounting services for the University and for Jack's Car Rentals, 1. Determine gain/loss on each transaction and the FV of the new asset acquired 2. Prepare journal entries to record each of the two transactionsIn the current year, Company A made the following cash purchases: 1. The exclusive right to manufacture and sell equipment from Company B for $203,000. Company B created the unique design for the equipment. Company A also paid an additional $11,500 in legal and filing fees to attorneys to complete the transaction. 2. An initial fee of $260,000 for a three-year agreement with Company C to use its name for a new facility in the local area. Company C has locations throughout the country. Company A is required to pay an additional fee of $5,300 for each month it operates under the Company C name, with payments beginning in March of the current year. Company A also purchased $403,000 of equipment to be placed in the new facility. 3. The exclusive right to sell a book, for $22,000. Required: Prepare a summary journal entry to record expenditures related to initial acquisitions. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account…Sandhill Ltd. purchased several intangible assets, as follows: Asset Licences Customer lists (a) The following information is also available: Asset Licences Purchase Cost Customer lists Patents Copyrights $80,000 In addition to the costs listed above, there were legal fees of $15,100 associated with the licence acquisitions. The licences are valid in perpetuity, and sales of the products produced under the licences have been strong and are expected to continue at the same level for many decades. The customer lists are expected to be useful for the next six years. The patent has a legal life of 20 years, but technological changes are expected to render it worthless after about 8 years. The copyright is good for another 40 years, but nearly all the related sales are expected to occur during the next 10 years. $ 60,300 Calculate the annual amortization expense, if any, that should be recorded for each of these intangible assets, assuming the straight-line method is appropriate. (Do not…
- This topic is about Property, Plant, and Equipment Based on the problem, What is the cost of the machine acquired in the exchange? How much is the gain on the exchange?During the current year, USACo (a domestic corporation) sold equipment to FrenchCo, a non-U.S. corporation, for $350,000 with title passing to the buyer in France. USACO purchased the equipment several years ago for $100,000 and took $80,000 of depreciation deductions on the equipment, all of which were allocated to U.S.-source income. USACo's adjusted basis in the equipment is $20,000 on the date of sale. What is the sourcing of the $330,000 gain on the sale of this equipment? a. $250,000 foreign source and $80,000 U.S. source. b. $250,000 U.S. source and $80,000 foreign source. c. $330,000 foreign source. d. $330,000 U.S. source. 0000