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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On June 1, 2025, Oriole Company sells $185,000 of shelving units to a local retailer, Blue Spruce, which is planning to expand its stores in the area. Under the agreement, Blue Spruce asks Oriole to retain the shelving units at its factory until the new stores are ready for installation. Title passes to Blue Spruce at the time the agreement is signed. The shelving units are delivered to the stores on September 1, 2025, and Blue Spruce pays in full. Prepare the journal entries for this bill-and-hold arrangement (assuming that conditions for recognizing the sale as a bill-and-hold sale have been met) for Oriole on June 1 and September 1, 2025. The cost of the shelving units to Oriole is $89,000. (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. List all debit entries before credit entries. Record journal entries in the order presented in the…
Keating Co. is considering disposing of equipment with a cost of $74,000 and accumulated depreciation of $51,800. Keating Co. can sell the equipment through a broker for $33,000, less a 7% broker commission. Alternatively, Gunner Co. has offered to lease the equipment for five years for a total of $49,000. Keating will incur repair, insurance, and property tax expenses estimated at $12,000 over the five-year period. At lease-end, the equipment is expected to have no residual value. The net differential income from the lease alternative is Oa. $4,417 Ob. $7,572 Oc. $9,465 Od. $6,310 Previous Next 7:36 PM 12/13/2020 CP DELL
On 13 February 20X5, Reekwa Company purchased an office tower for $31.1 million. The office is a mixed-use property: it is owner- occupied and includes rental units. The fair value of the building on 31 December 20X6 is $31.5 million and $28.0 million on 31 December 20X8. At the time of purchase, the office tower has a remaining useful life of 25 years, and is amortized on a straight-line basis. Required: 1. Should the office tower be considered property, plant, and equipment or investment property? Property, plant, and equipment Investment property 2. Assume the property is determined to be PPE, and management applies the elimination method for the revaluation model. Prepare the required journal entries for the revaluation of the office tower in 20X6 and 20X8. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No 1 Date 31 December 20X6 No journal entry required 2 31 December 20X8 Accounts payable General Journal Debit × ×…
On January 1, 2024, Nguyen Electronics leased equipment from Nevels Leasing for a four-year period ending December 31, 2027, at which time possession of the leased asset will revert back to Nevels. The equipment cost Nevels $779,677 and has an expected economic life of five years. Nevels expects the residual value on December 31, 2027, will be $103,000. Negotiations led to the lessee guaranteeing a $146,000 residual value. Equal payments under the lease are $203,000 and are due on December 31 of each year with the first payment being made on December 31, 2024. Nguyen is aware that Nevels used a 8% interest rate when calculating lease payments. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: Prepare the appropriate entries for both Nguyen and Nevels on January 1, 2024, to record the lease. Prepare all appropriate entries for both Nguyen and Nevels on December 31, 2024, related to the lease.
On March 1, 2022, Wildhorse Company acquired real estate, on which it planned to construct a small office building, by paying $98,000 in cash. An old warehouse on the property was demolished at a cost of $ 11,000; the salvaged materials were sold for $ 3,100. Additional expenditures before construction began included $ 2,000 attorney's fee for work concerning the land purchase, $ 6,300real estate broker's fee, $ 10,800 architect's fee, and $ 18,200 to put in driveways and a parking lot. Determine the amount to be reported as the cost of the land. Cost of the land $ enter the Cost of the land in dollars
Keating Co. is considering disposing of equipment with a cost of $71,000 and accumulated depreciation of $49,700. Keating Co. can sell the equipment through a broker for $32,000 less 7% commission. Alternatively, Gunner Co. has offered to lease the equipment for five years for a total of $47,000. Keating will incur repair, insurance, and property tax expenses estimated at $9,000 over the five-year period. At lease-end, the equipment is expected to have no residual value. The net differential income from the lease alternative is A:$5,768 B:$8,240 C:$9,888 D:$12,360
Headland Mining Company purchased land on February 1, 2020, at a cost of $939,500. It estimated that a total of 51,600 tons of mineral was available for mining. After it has removed all the natural resources, the company will be required to restore the property to its previous state because of strict environmental protection laws. It estimates the fair value of this restoration obligation at $92,700. It believes it will be able to sell the property afterwards for $103,000. It incurred developmental costs of $206,000 before it was able to do any mining. In 2020, resources removed totaled 25,800 tons. The company sold 18,920 tons. Compute the following information for 2020. (a) Per unit mineral cost (b) Total material cost of December 31, 2020, inventory $4 (c) Total material cost in cost of goods sold at December 31, 2020 24
Tamarisk Mining Company purchased land on February 1, 2020, at a cost of $945,100. It estimated that a total of 55,500 tons of mineral was available for mining. After it has removed all the natural resources, the company will be required to restore the property to its previous state because of strict environmental protection laws. It estimates the fair value of this restoration obligation at $104,400. It believes it will be able to sell the property afterwards for $116,000. It incurred developmental costs of $232,000 before it was able to do any mining. In 2020, resources removed totaled 27,750 tons. The company sold 20,350 tons. Compute the following information for 2020. (a) Per unit mineral cost $enter a dollar amount (b) Total material cost of December 31, 2020, inventory $enter a dollar amount (c) Total material cost in cost of goods sold at December 31, 2020 $enter a dollar amount
On July 1, 2021, Company A purchased land and buildings and agreed to rent the facility to a non-affiliated company on a month-by- month basis. Pertinent details follow: i. The company paid 6.0million fortheinvestmentpropertyplus200,000 in related legal fees. The purchase price was allocated 80% to the building and 20% to the land. ii. The estimated useful life of the building is 30 years at which time the salvage value is expected to be $0. iii. The company uses the straight-line method to depreciate all depreciable assets. iv. An appraisal valued the investment property at $6.4 million as at December 31, 2021, year-end-5.1millionbuildingand1.3 million land. Required (1) Prepare the journal entry to record the purchase of the property. (2) Prepare the year-end adjusting entries for 2021 assuming that the company elects to use the cost model to account for investment property. (3) Prepare the year-end adjusting entries for 2021 assuming that the company elects to use the fair value…
On June 21, 2021, YY Trading acquired a property intended for future construction of a new building. The following costs were incurred: Acquisition cost of property 10,000,000 Demolition cost of old building 250,000 Transfer of title fees, legal fees 85,000 Surveying fees 30,000 Scrap metals from demolition proceeds 15,000 Grading and leveling of land 20,000 Annual property tax for 2022 paid on Nov. 5 15,000 As of year-end, the above property was valued at P10,385,000. At what amount was the company's income overstated during the year? Group of answer choices 15,000 30,000 0 Cannot be determined.
Tamarisk Mining Company purchased land on February 1, 2020, at a cost of $ 914,300. It estimated that a total of 53,400 tons of mineral was available for mining. After it has removed all the natural resources, the company will be required to restore the property to its previous state because of strict environmental protection laws. It estimates the fair value of this restoration obligation at $ 98,100. It believes it will be able to sell the property afterwards for $ 109,000. It incurred developmental costs of $ 218,000 before it was able to do any mining. In 2020, resources removed totaled 26,700 tons. The company sold 19,580 tons. Compute the following information for 2020. a) Per unit mineral cost $ (b) Total material cost of December 31, 2020, inventory $ (c) Total material cost in cost of goods sold at December 31, 2020 $
During 2021, Ming's Book Store paid $486,000 for land and built a store in Naperville, Illinois. Prior to construction, the city of Naperville charged Ming's $1,000 for a building permit, which Ming's paid. Ming's also paid $15,000 for architect's fees. The construction cost of $670,000 was financed by a long-term note payable, with interest costs of $28,020 paid at the completion of the project. The building was completed June 30, 2021. Ming's depreciates the building using the straight-line method over 35 years, with estimated residual value of $330,000. Read the requirements. ISY ent 1. Journalize transactions for the following (explanations are not required): a. Purchase of the land, b. All the costs chargeable to the building in a single entry, and c. Depreciation on the building for 2021. (Record debits first, then credits. Exclude explanations from any journal entries.) a. Journalize the purchase of the land. Journal Entry

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