Galore Company ventured into construction of a condominium in Makati which is rated as the largest state-of-the-art structure.The entity's board of directors decided that instead of selling the condominium, the entity would hold thisproperty for purposes of eaming rentals by letting out space to business executives in the area.The construction of the condominium was completed and the property was placed in service on January 12019.The cost of the construction was P50,000,000. The useful life of the condominium is 25 years and its residualvalue is P5,000,000.An independent valuation expert provided the following fair value at each subsequent year-end:December 31, 2019December 31, 2020December 31, 202155,000,00053,000,00060,000,000Required:Prepare all indicated entries for 2019, 2020 and 2021 assuming the investment property is accounted for underthe cost model and fair value model.

Journal entry is the process of recording the business transactions in the accounting books for the…

Answered: Galore Company ventured into…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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GGG Company ventured into construction of a condominium in Baguio which is rated as the largest state-of-the-art structure. The board of directors decided that instead of selling the condominium, the entity would hold this property for purposes of earning rentals by letting out space to business executives in the area. The construction of the condominium was completed and the property was placed in service on January 1, 2019. The cost of the construction was P50,000,000. The useful life of the condominium is 25 years and the residual value is P5,000,000. An independent valuation expert provided the following hair value at each subsequent year-end: December 31, 2019 = 55,000,000; December 31, 2020 = 53,000,000; December 31, 2021 = 60,000,000. Under fair value model, what amount should be recognized as gain from change in fair value in 2019?
On March 31, 2024, a company purchased the right to remove gravel from an old rock quarry. The gravel is to be sold as roadbed for highway construction. The cost of the quarry rights was $232,200, with estimated salable rock of 27,000 tons. During 2024, The company loaded and sold 5,000 tons of rock and estimated that 22,000 tons remained on December 31, 2024. On January 1, 2025, the company estimated that 10,000 tons still remained. During 2025, the company loaded and sold 15,000 tons. The company uses the units-of-production method. The company would record depletion in 2024 in the amount of: Note: Do not round depletion rate per ton. Multiple Choice $43,340. $52,773. $32,250. $43,000.
Bright Co. received a government grant of 10,000,000 to install and run a windmill in an economically backward area. The entity had estimated that such a windmill would cost 25,000,000 to construct. The secondary condition attached to the grant is that the entity shall hire labor in the area where the windmill is located. The construction was completed on January 1, 2014. The windmill is to be depreciated using the straight-line method over a period of 10 years. What amount of grant income should be recognized for 2014? O2,500,000 1,500,000 O 1,000,000 5,000,000
On April 20, 2020, Wilhamette Incorporated purchased the right to remove timber from a 20,000-acre tract of land in Oregon over the next three years, and the company estimates no residual value. The timber is to be sold as lumber for new home construction. The cost of the timber rights was $600,000, with estimated salable timber feet of 800,000. During 2020 and 2021, Wilhamette harvested and sold 650,000 feet of timber. What is the book value of the timber rights at the end of 2021, assuming the company uses the units-of-production method?
Company A entered into a P4,500,000 fixed-price contract with a contractor on March 1, 2019 for the construction of an office building. The building was completed and occupied on September 30, 2020. Additional construction costs were incurred as follows: Plans, specifications and blueprints 18,000 Architect's fees for design and supervision 142,500 The building is estimated to have a 40-year useful life from the date of completion and will be depreciated using the 150%-declining balance method. To finance the construction cost, the company borrowed P4,500,000 on March 1, 2019. The loan is payable in 10 annual installments of P450,000 plus interest at the rate of 10%. The company used part of the loan proceeds for working capital requirements. The Company's average amounts of accumulated building construction expenditures were as follows: For the period March 1 to December 31, 2019 1,350,000 For the period January 1 to September 31, 2020 3,450,000…
Sam Ltd owns a piece of vacant land in Broadmeadows. A substantial number of factory owners establish their manufacturing plant in this location due to its accessibility and high affordability. The management of Sam Ltd wants to adopt fair value model to measure the land on 30 June 2021. Which of the following information is most useful in assisting management in estimating the fair value of the land? Group of answer choices Sam Ltd intends to lease out the land in the next financial year, and they believe they could receive an annual lease payment of $50,000. A factory owner purchased a piece of vacant land near Broadmeadows for $1m to build a new factory plant on 21 May 2021. The cost to build a new factory on a piece land in Broadmeadows is about $200,000. A landowner sold a piece of vacant land in Southbank to a property developer for $1.05m on 21 May 2021.
Blossom's Drillers erects and places into service an off-shore oil platform on January 1, 2025, at a cost of $8,160,000. Blossom estimates it will cost $1,007,000 to dismantle and remove the platform at the end of its useful life in 10 years, which the company is legally required to do. (The fair value at January 1, 2025, of the dismantle and removal costs is $430,000.) Prepare the entry to record the asset retirement obligation. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. List debit entry before credit entry.) Account Titles and Explanation Debit Credit
The following costs were incurred by ABCDEFGH, Inc.. during 2020: July 1 Organization fees P120,000 July 2 Land site and old building 1,890,000 July 3 Option payments 250,000 July 20 Broker’s fees on property acquired 110,400 July 30Cost of remodeling the building 60,000 August 30 Salaries of executives 360,000 December 21 Real property taxes 240,000 Additional information: The building acquired had a fair value of P450,000 while the land was currently appraised at P1,800,000 P50,000 of the option money paid were for properties not acquired. The executives had no participation on the remodeling of the building The property taxes were for the 2020 calendar year. How much is the cost of land? a. 1,856,320 b. 2,288,000 c. 1,992,320 d. 1,512,000
Please explain it properly
In 2021, Bratten Fitness Company made the following cash purchases: The exclusive right to manufacture and sell the X-Core workout equipment from Symmetry Corporation for $216,000. Symmetry created the unique design for the equipment. Bratten also paid an additional $10,500 in legal and filing fees to attorneys to complete the transaction. An initial fee of $325,000 for a three-year agreement with Silver’s Gym to use its name for a new facility in the local area. Silver’s Gym has locations throughout the country. Bratten is required to pay an additional fee of $6,600 for each month it operates under the Silver’s Gym name, with payments beginning in March 2021. Bratten also purchased $416,000 of exercise equipment to be placed in the new facility. The exclusive right to sell Healthy Choice, a book authored by Kent Patterson, for $35,000. The book includes healthy recipes, recommendations for dietary supplements, and natural remedies. Bratten plans to display the book at the check-in…
Sheridan Corporation owns and manages a small 10-store shopping centre, which it classifies as an investment property. Sheridan has a May 31 year end and initially recognized the property at its acquisition cost of $11.2 million on June 2, 2022. The acquisition cost consisted of the purchase price of $105 million, costs to survey and transfer the property of $460,000, and legal fees to acquire the property of $240,000. Sheridan determines that approximately 26% of the shopping centre's value is attributable to the land, with the remainder attributable to the building. The following fair values are determined: Date May 31, 2023 May 31, 2024 Fair Value $10,700,000 $10,594,000 May 31, 2025 $11,208,000 Sheridan expects the shopping centre building to have a 35-year useful life and a residual value of $1.428 million. Sheridan uses the straight-line method for depreciation.
ABC Limited located in a country which has capital gains tax, conducted the following transactions: Purchased a building in February 2018 for $26,000,000. In March 2019, the company spent $2,800,000 to install solar panels for electricity in the building. The building was sold for $40,000,000 in 2021. The annual maintenance cost was $500,000. The cost of advertising the sale of the building and the legal fees amounted to $1,200,000. A motor vehicle was purchased for $5 million on January 1, 2018. The vehicle was sold in 2021 for $4.5 million. Bought an antique painting for $3.5 million in 2019. The painting was sold in 2021 for 1million. Purchased a government bond for $5,000,000 in 2018 and sold it for $7,500,000 in 2021. The company is entitled to an Annual Exemption of $500,000. Capital losses as of 1 January 2021 was $1,500,000. Calculate the capital gains tax in 2021, assuming a capital gain tax of 20%. $2,000,000 $1,400,000 $1,100,000 $600,000

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