Karlene Company and Erika Company are fuel oil disti ers. To facilitate the delivery of oil to customers, the two entities exchanged ownership of barrels of oil without physically moving the oil. Karlene paid Erika P1,500,000 to compensate for a difference in the grade of oil. It was reliably determined that the configuration of the cash flows of the asset received does not differ from the configuration of the cash flows of the asset transferred. On the date of exchange, the oil inventory of Karlene has a carrying amount of P5,000,000 and fair value of P7,000,000. The oil inventory of Erika has a carrying amount of P6,000,000 and fair value of P8,500,000. What amount should Karlene record as cost of the oil inventory receive in exchange? A. 4,500,000 B. 6,500,000 7000 000

Karlene Company and Erika Company are fuel oil disti ers. To facilitate the delivery of oil to customers, the two entities exchanged ownership of barrels of oil without physically moving the oil. Karlene paid Erika P1,500,000 to compensate for a difference in the grade of oil. It was reliably determined that the configuration of the cash flows of the asset received does not differ from the configuration of the cash flows of the asset transferred. On the date of exchange, the oil inventory of Karlene has a carrying amount of P5,000,000 and fair value of P7,000,000. The oil inventory of Erika has a carrying amount of P6,000,000 and fair value of P8,500,000. What amount should Karlene record as cost of the oil inventory receive in exchange? A. 4,500,000 B. 6,500,000 7000 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

Windsor Company exchanged equipment used in its manufacturing operations plus $3,480 in cash for similar equipment used in the operations of Sheridan Company. The following information pertains to the exchange. Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange has commercial substance.
Pensacola Inc. purchased equipment on January 1, 2016 for $135,000. Ater 3 years Pensacola exchanged the equipment for a truck from Mam, Inc in a non-monetary exchange. The balance in the Accumulated Depreciation account at the time of the exchange was $75,000. Assume the exchange lacks commercial substance. At the time of the exchange, the fair value of the equipment was $77 000 and the fair vallue of the truck was $57,000. Miami paid 520,000 cashtoot to Pensacola What is the cost basis of the truck acquired by Pensacola? O $44,415 $52,585 $57,000 O $40,000 O None of the above
Yin Co traded in an old machine having a carrying amount of P16,800, and paid a cash difference of P6,000 for a new machine having a total cash price of P20,500. What amount of loss should Yin Co. recognized on this exchange?
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?
Ayayai Corp., a mining company, owns a significant mineral deposit in a northern territory. Ayayai prepares financial statements in accordance with IFRS. Included in the asset is a road system that was constructed to give company personnel access to the mineral deposit for maintenance and mining activity. The road system cannot be sold separately and separate cash flow information is not available for it. The carrying amounts of two cash-generating units of the mine at June 30, 2023, are as follows: Machinery Mine in the development phase The machinery's value in use has been assessed at $4,500,000 while the fair value less costs to sell is $3,800,000. With respect to the mine, the value in use is $8,000,000 while fair value less costs to sell is $8,200,000. $4,000,000 $8,350,000 (b) Determine if the machinery and the mine are impaired and prepare the journal entries, if any, to record the impairment at June 30, 2023. (Credit account titles are automatically indented when the amount is…
[The following information applies to the questions displayed below.) Metro Corporation traded Building A for Building B. Metro originally purchased Building A for $50,000, and Building A's adjusted basis was $25,000 at the time of the exchange. What is Metro's realized gain or loss, recognized gain or loss, and adjusted basis in Building B in each of the following alternative scenarios? Note: Loss amounts should be indicated by a minus sign. Input all other amounts as positive values. Leave no answers blank. Enter zero is applicable. d. The fair market value of Building A is $45,000, and Metro trades Building A for Building B valued at $40,000 and $5,000 cash. Building A and Building B are like kind property. Description (1) Amount realized from Building B (2) Amount realized from boot (cash). (3) Total amount realized (4) Adjusted basis (5) Gain realized (6) Gain recognized (7) Deferred gain Adjusted basis in Building Br Amount S $ $ 40,000 5,000 45.000
Blossom Corp. exchanged Building 24, which has an appraised value of $1,896,000, a cost of $2,722,000, and accumulated depreciation of $1,248,000, for Building M which belongs to Splish Ltd. Building M has an appraised value of $1,600,000, a cost of $3,182,000, and accumulated depreciation of $1,782,000. Splish paid Blossom the difference between the appraised values of the two buildings. Assume depreciation has been updated to the date of exchange. Prepare the entries on both companies' books, assuming the buildings are similar assets and there is no commercial substance for either company. (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.) Account Titles Blossom Corp. Buildings Accumulated Depreciation - Buildings Buildings Cash Debit 1243882 1248000 296000 Credit 2722000
On January 1, 2010, P Company acquired the net assets of S Company for $1,580,000 cash. The fair value of S Co. identifiable net assets was $1,310,000 on this date. P Company decided to measure goodwill impairment using the present value of future cash flows to estimate the fair value of the reporting unit (S Co.). The information for these subsequent years is as follows: Carrying value of S Co. Identifiable Net Assets $1,160,000 $1,120,000 Fair Value SCo. Identifiable Net Assets $1,190,000 $1,210,000 Present value of Future Cash Flows $1,390,000 $1,400,000 * Identifiable net assets do not include goodwill. Year 2011 2012 Choose the correct answer: In year 2011 S Company had: * Excess of fair value over carrying value of $30,000 Excess of carrying value over fair value of $30,000 Excess of fair value over carrying value of $40,000 Excess of carrying value over fair value of $40,000 None of the options is correct
Hoolia Corporation acquires equipment and patents from another company for $50 million and records the acquisition as an asset acquisition. The equipment has a fair value of $19.20 million and the patents have a fair value of $28.80 million. Neither asset is nonqualifying. At what value does Hoolia record the equipment? Select one: a. $25.0 million b. $20.0 million c. $21.2 million d. $19.2 million
Joshua Bank (a NON-VAT registered entity) purchased an intangible asset from Tristan Co. for $590,000 when the exchange rate was ₱1: $.0204. A 5% discount was available on the purchase. Non-transferrable taxes paid amounted to 20% of the invoice price, net of the discount. A 12% VAT was also paid based on the amount that is gross of the non-transferrable taxes. Installation and testing costs amounted to ₱40,000. How much will be recorded as intangible asset? Question 7 options: a 36,976,059 b 33,010,598 c 33,050,589 d 36,967,059
On January 1, 2010, P Company acquired the net assets of S Company for $1,580,000 cash. The fair value of S Co. identifiable net assets was $1,310,000 on this date. P Company decided to measure goodwill impairment using the present value of future cash flows to estimate the fair value of the reporting unit (S Co.). The information for these subsequent years is as follows: Carrying value of SCo. Identifiable Net Assets $1,160,000 $1,120,000 Fair Value S Co. Identifiable Net Assets $1,190,000 $1,210,000 Present value of Future Cash Flows $1,390,000 $1,400,000 Year 2011 2012 * Identifiable net assets do not include goodwil.
Marigold Corporation traded a used truck for a new truck. The used truck cost $25,000 and has accumulated depreciation of $21,250. The new truck is worth $43,750. Marigold also made a cash payment of $41,250. Prepare Marigold's entry to record the exchange. (The exchange has commercial substance.) (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.)