Emilio Co. insured the life of its president for P8,000,000, the entity being the beneficiary of an ordinary life insurance policy. The annual premium is P500,000 and the policy is dated January 1, 2021. The cash surrender values are: December 31, 2023 December 31, 2024 P450,000 570,000 The entity follows the calendar year as its fiscal period. The president died on October 1, 2024 and the policy is settled on December 31, 2024. 1. What amount should Emilio Co. report as gain on life insurance settlement in its 2024 profit or loss?

Emilio Co. insured the life of its president for P8,000,000, the entity being the beneficiary of an ordinary life insurance policy. The annual premium is P500,000 and the policy is dated January 1, 2021. The cash surrender values are: December 31, 2023 December 31, 2024 P450,000 570,000 The entity follows the calendar year as its fiscal period. The president died on October 1, 2024 and the policy is settled on December 31, 2024. 1. What amount should Emilio Co. report as gain on life insurance settlement in its 2024 profit or loss?

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, 2020, CDO Corporation created a special building fund by depositing a single sum of P100.000 with an independent trustee. The purpose of the fund is to provide resources to build an addition to the older office building during the latter part of 2024. The company anticipates a total construction cost of P500.000 and completion by January 1, 2025. The company plans to make equal annual deposit from December 31, 2020 through 2024, to accumulate the P500.00O. The independent trustee will increase the fund each December 31 at an interest rate of 10%. The accounting periods of the company and the fund end on December 31. How much is the fund balance as of December 31, 2020? (Round off future value factors to five decimal places)
On December 31, 2018, L Inc. had a $1,600,000 note payable outstanding, due July 31, 2019. L borrowed the money to finance construction of a new plant. L planned to refinance the note by issuing long-term bonds. Because L temporarily had excess cash, it prepaid $510,000 of the note on January 23, 2019. In February 2019, L completed a $3,100,000 bond offering. L will use the bond offering proceeds to repay the note payable at its maturity and to pay construction costs during 2019. On March 13, 2019, L issued its 2018 financial statements. What amount of the note payable should L include in the current liabilities section of its December 31, 2018, balance sheet? Multiple Choice $1,090,000. $1,600,000. $510,000. $0. Please don't provide answer in image format thank you
On January 1, 2022, Don Buchanan purchases a business that he will carry on as a sole proprietor. The purchase price includes $60,000 for goodwill. The business has a fiscal period that ends on December 31 and, for 2022, Don claims the maximum CCA. On January 1, 2023, the business is sold in an arm's length transaction with $82,000 paid for the goodwill. The affect of the sale of the goodwill is to increase net income for 2022 by: a. $14,000. b. $13,500. c. $15,500. d. $11,000.
5. Soriano's Corporation's liability account balances at June 30, 2020, included a 10% notes payable in the amount of P3,600,000. The note is dated October 1, 2019, and is payable in three equal annual payments of P1,200,000 plus interest. The first interest and principal payment was made on October 1, 2020. In its June 30, 2021 financial statement, what amount should be recorded as accrue interest for this note?
Edible Chemicals Corporation owns a $4 million whole life insurance policy on the life of its CEO, naming EdibleChemicals as beneficiary. The annual premiums are $70,000 and are payable at the beginning of each year. Thecash surrender value of the policy was $21,000 at the beginning of 2018.Required:1. Prepare the appropriate 2018 journal entry to record insurance expense and the increase in the investmentassuming the cash surrender value of the policy increased according to the contract to $27,000.2. The CEO died at the end of 2018. Prepare the appropriate journal entry
The following selected transactions relate to liabilities of Chicago Glass Corporation for 2024. Chicago's fiscal year ends on December 31. On January 15, Chicago received $7,400 from Henry Construction toward the purchase of $70,000 of plate glass to be delivered on February 6. On February 3, Chicago received $7,100 of refundable deposits relating to containers used to transport glass components. On February 6, Chicago delivered the plate glass to Henry Construction and received the balance of the purchase price. First quarter credit sales totaled $740,000. The state sales tax rate is 4% and the local sales tax rate is 2%. Required: Prepare journal entries for the above transactions. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
On April 1, 2019, Flamengo Co. signed a one-year, 8% interest-bearing note payable for $50,000. Assuming that Flamengo Co. maintains its books on a calendar year basis, how much interest expense should be reported in the 2020 income statement? a.$1,000. B.$2,000. C.$4,000. D.$3,000. Which of the alternatives results from the accrual of interest: A.Increase in liabilities and decrease in stockholders' equity. B.Increase in assets and stockholders' equity. C.Increase in assets and liabilities. D.Increase in liabilities and increase in stockholders' equity. Unfortunately, Flamengo Co. is involved in a lawsuit. When would the lawsuit be recorded as a liability on the balance sheet? A.When the loss is probable and the amount can be reasonably estimated. B.When the loss probability is reasonably possible and the amount can be reasonably estimated. C.When the loss is probable regardless of whether the loss can be reasonably estimated. D.When the loss…
In 2015, Maine Corporation bought a $5,000,000 life insurance policy on its president, of which Maine Corporation is the beneficiary. Information regarding the policy for the year ended December 31,2020 follows: Cash surrender value, 1/1/2020 : $435,000 Cash surrender value, 12/31/2020 : $540,000 Annual advance premium paid 1/1/2020 : $200,000 During 2020, dividends of $30,000 were applied to increase the cash surrender value of the policy. How much should be the life insurance expense for 2020?
Tandang Sora Corp. purchased a P5,000,000 ordinary life insurance policy on its president. Tandang Sora is the beneficiary under the policy. The policy year and Tandang Sora's accounting year coincide. Additional data available for the year ended December 31, 2024 are as follows: Cash surrender value, January 1 Cash surrender value, December 31 Annual advance premium paid January 1 Dividend received on July 1 What amount should be reported as life insurance expense for 2024? 348,000 432,000 160,000 24,000
On January 2, 2023, Eagle Corp. borrowed $25,000 from Bank Three. The loan was to be repaid in equal principal installments of $5,000, payable on December 31 of each year. beginning on December 31, 2023. Disregarding interest, the amount of the $25,000 loan that should be considered a long-term liability on the company's balance sheet for the year ended December 31, 2024 would be:
On December 31, 2020, Stormy & Co. started a defined benefit plan for its president. The plan provides for an annual pension to the executive, equal to 2% of the executive’s highest lifetime salary multiplied by number of years of service within the entity. On date of establishment, the president already has worked for ten years, and his current salary as of this date is P500,000. The president is expected to retire in 25 years, and his/her salary is expected to increase by 3% on average. He/she is also estimated to have a life expectancy of 15 years after retirement and will receive his/her annual pension at the end of each year after retirement. Market yield of high-quality corporate bonds is 8%. Below is the relevant PV and Future Value (FV) factors:· Future value of 1 at 3% for 25 periods: 2.094· PV of an ordinary annuity at 8% for 15 periods: 8.559· PV of 1 at 8% for 25 periods: 0.146How much is the projected benefit obligation upon establishment of the…
On January 1, 2025, Mary Johnson signed an agreement, covering 5 years, to operate as a franchisee of Blossom Inc. for an initial franchise fee of $50,000. The amount of $9,000 was paid when the agreement was signed, and the balance is payable in five annual payments of $8,200 each, beginning January 1, 2026. The agreement provides that the down payment is nonrefundable and that no future services are required of the franchisor once the franchise commences operations on April 1, 2025. Mary Johnson's credit rating indicates that she can borrow money at 8% for a loan of this type. Click here to view the factor table. (a) Your answer is correct. Prepare journal entries for Blossom for 2025-related revenue for this franchise arrangement. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. Round present value factor calculations to 5 decimal…