DEF Company had acquired the following assets: Purchased Equipment on January 1, 2022 with a list price of P1,500,000 and was acquired with the following terms: Trade discount of 10%; O O O Down payment of P150,000; Issued a non-interest bearing note payable in annual installments of P105,000 starting December 31, 2022. Total face value of the note was P420,000. The cash price equivalent for the machinery was not available. The incremental borrowing rate of DEF was 8%. PVF of P1 ordinary annuity for 4 periods was 3.31. A building was donated by a wealthy shareholder of DEF Company. At the time of donation, the fair value of the building was P15,000,000. DEF incurred necessary costs amounting to P150,000 in relation to the donated building. The cost of the building to the wealthy shareholder was P10,000,000. Offered cash discount of 2% (which DEF did not take). Purchased Machinery on January 1, 2022 under the following terms: 0 REQUIREMENTS: What is the initial cost of the equipment? What is the initial cost of the machinery? What is the initial cost of the building? What is the initial cost of the building? O a. 150,000 Ob. 13,500,000 Oc. 15,000,000 Od. 10,000,000

DEF Company had acquired the following assets: Purchased Equipment on January 1, 2022 with a list price of P1,500,000 and was acquired with the following terms: Trade discount of 10%; O O O Down payment of P150,000; Issued a non-interest bearing note payable in annual installments of P105,000 starting December 31, 2022. Total face value of the note was P420,000. The cash price equivalent for the machinery was not available. The incremental borrowing rate of DEF was 8%. PVF of P1 ordinary annuity for 4 periods was 3.31. A building was donated by a wealthy shareholder of DEF Company. At the time of donation, the fair value of the building was P15,000,000. DEF incurred necessary costs amounting to P150,000 in relation to the donated building. The cost of the building to the wealthy shareholder was P10,000,000. Offered cash discount of 2% (which DEF did not take). Purchased Machinery on January 1, 2022 under the following terms: 0 REQUIREMENTS: What is the initial cost of the equipment? What is the initial cost of the machinery? What is the initial cost of the building? What is the initial cost of the building? O a. 150,000 Ob. 13,500,000 Oc. 15,000,000 Od. 10,000,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

On January 1, 2025, Sunland Company makes the two following acquisitions. 1. Purchases land having a fair market value of $860,000 by issuing a 5-year, zero-interest-bearing promissory note in the face amount of $1,263,622. 2. Purchases equipment by issuing a 5%, 9-year promissory note having a maturity value of $350,000 (Interest payable annually on January 1). The company has to pay 9% interest for funds from its bank. (a) Record the two journal entries that should be recorded by Sarasota Company for the two purchases on January 1, 2025. (b) Record the interest at the end of the first year on both notes using the effective-interest method.
The company ALPHA on 31/8/2021 sells mechanical equipment for € 380,000.The equipment was acquired on 1/5/2016 (date of commencement of production activity) for an amount of € 450,000. The depreciation rate of the equipment is 10% per year. Make the relevant accounting entries for the sale.
On January 1, 2014, ENERVATE TO WEAKEN Company had the following borrowings made for general purposes and a part of the proceeds was used to finance the construction of a qualifying asset. 12% short-term note-P40,000,000 14% bank loan (3-year)- 72,000,000 16% note payable (5-year)- 88,000,000 The construction of the qualifying asset was started on immediately and completed on June 30, 2015 and expenditures incurred on the qualifying asset were as follows: Jan. 1 P19,200,000 Mar. 31 8,800,000 July 30 14,000,000 March 31 21,600,000 June 30 1,200,000 How much is the cost of the new constructed building?
In its December 31, 2020, statement of financial position, what amount should Maelet report as an intangible asset-franchise
On December 31, 2015 the Neptune Corporation acquired acustom-made plant asset by issuing a promissory note with a face value of $ 1,200,000, a due date of December 31, 2025 and a stated (coupon) rate of interest of 4%. Interest is compounded annually and is payable at the end on each year. The fair value of the customized asset is not readily determinable and the note receivable is not publicly traded. Given the company's incremental borrowing rate and current market conditions, the imputed rate of interest for the note is estimated as 7%. Determine the present value of the note and prepare the journal entry to record the transaction for Neptune Corporation.
On January 1, 2016, Guava Co. bought a patent for P270,000. Amortization is being made over its remaining life of 10 years expiring on January 1, 2026. During 2020, Guava Co. estimated that the economic life of the patent will be 7 years from the date of acquisition. What amount should Guava Co. report as patent net of accumulated amortization in its December 31, 2020 balance sheet? * P1,600,000 P108,000 P54,000 P23,143 answer not given
On December 2, 2022, Pancit Manufacturing Company purchased goods with a cash price of P1,600,000. Some of the costs incurred in connection with the acquisition of the goods were as follows: Import duties, P160,000; transportation costs, P80.000; and handling costs, P40,000. These goods were received on December 31, 2022. In Pancit's December 31, 2022 balance sheet, at what amount should these goods be included in inventory?
HK Ltd acquired machinery with a cash price of $100,000 under hire purchase terms. HK Ltd made a down payment of $20,000 on 1 September 2019 and settled the balance by 16 equal monthly installments of $5,500 each starting on 1. October 2019. HK Ltd closes its accounts on 31 March each year. The annual allowance rate for the machinery is 30%. Which statement concerning the depreciation allowances for the machinery is correct? OA. The machinery will be transferred to the 30% pool in 2020/21. OB. The annual allowance in the year of assessment 2019/20 is $20,460. OC. The annual allowance in the year of assessment 2020/21 is $5,700. OD. No initial allowance will be given in the year of assessment of 2020/21.
1.On January 1, 2021, ABC Company acquired an equipment from DEF Company in lieu of cash payment, ABC Company gave DEF Company a 3-year, 3%, P2,000,000 interest-bearing note payable. The interest is payable every December 31 while the principal shall be payable as follows: December 31, 2021, P1,200,000; December 31, 2022, P400,000; and December 31, 2023, P400,000. The prevailing rate of interest for this type of note is 12%. How much is the cost of the equipment acquired on January 1, 2021? How much is the interest expense for 2021?
ABC Company has outstanding P 20,500,000 (20,000,000 face value and 500,000 interest payable) note payable to DEF Company on December 31,2020 which is also the due date of this liability.Because of financial difficulties, ABC Company negotiates with DEF to exchange a building with a book value of P 18,000,000. The fair value of this asset base on the market is P 19,750,000.How much is the gain on debt restructuring?
Hw.144.
(a) On January 1, 2025, Skysong Inc. purchased land that had an assessed value of $376,000 at the time of purchase. A $585,000, zero- interest-bearing note due January 1, 2028, was given in exchange. There was no established exchange price for the land, nor a ready fair value for the note. The interest rate charged on a note of this type is 12%. Determine at what amount the land should be recorded at January 1, 2025, and the interest expense to be reported in 2025 related to this transaction. (Round intermediate calculation to 5 decimal places, e.g. 0.23451 and final answers to O decimal places, e.g. 38,548.) Land to be recorded at January 1, 2025 Interest expense to be reported $ $ (b) On January 1, 2025, Concord Furniture borrowed $3,600,000 (face value) from Sinise Co., a major customer, through a zero- interest-bearing note due in 4 years. Because the note was zero-interest-bearing, Concord Furniture agreed to sell furniture to this customer at lower than market price. A 10% rate…