Nona Co. purchased land worth P20,000,000 on January 1, 2021. The company uses the revaluation model in accounting for its PPE. On December 31, 2021, an independent appraiser valued the land at P43,000,000. But on December 31, 2022, the land had a fair value of P8,000,000. How much revaluation deficit/impairment loss should be recognized in the income statement on December 31, 2022?
Q: On January 1, 2019, TPS Company purchased for P4,800,000 a machine with a useful life of ten years…
A: The depreciation expense for the year 2021 can be calculated as depreciable basis of asset divided…
Q: Avocado Inc. acquire a machinery at a cost of P10,000,000 on January 1, 2021 to be used in the…
A: The question is related to the Depreciation Accounting. The details are given regarding the same.
Q: How much is the loss/gain on classification of the old machinery as held for sale? What is the…
A: Loss on the classification of the old machinery as held for sale is P 3.2 million. Journal entry to…
Q: Rover Inc. purchased land for $118,000,000 in 2011. At December 31, 2020, an appraisal determined…
A: "Since you have asked multiple questions, we will solve first question for you. if you want any…
Q: On December 31, 2021, Purple Company sold a building, receiving as a consideration a P4,000,000…
A: Present value of 1 for three period at 12% = 0.711780 Hence present value of P4,000,000 =…
Q: On October 5, 2019, Bancnet Company traded its old delivery equipment with Megalink Company's office…
A: It is pertinent to note that if an item of property, plant and equipment is acquired in exchange of…
Q: On January 1, 2019, Ferrothorn Co. sold equipment, to its subsidiary, Klang Corp., for P115,000. The…
A: Actual cost of asset=125000 less Accumulated depreciation =45000 Value of asset as on 1.1.19= 80000…
Q: On January 1, 2021, Globe Company sold a piece of machinery to Troll Company for P2,400,000. Because…
A: Lease liability is the present value of lease payments to be made by lessee over the lease term by…
Q: On January 1, 2013, Ameen Company purchased a building for $36 million. Ameen uses straight-line…
A: Deferred tax: Deferred taxes are taxes that will be paid in future period. Deferred tax is a…
Q: Gray Company was granted a patent on January 1, 2018 and appropriately capitalized P450,000 of…
A: On 1st Jan, 2018, patent was capitalized for P 4,50,000. Amortisation per year over its useful life…
Q: On January 2, 2020, Quezon Inc. purchased equipment with a cost of P10,500,000, a useful life of 12…
A: The impairment loss = = Carrying Amount - Recoverable Amount Where Recoverable Amount = 1) Fair…
Q: On 30 June 2019, TIE Ltd acquired a machire for $180 000 cash, with an expected useful life of 9…
A:
Q: Burmilla purchased an equipment on January 1, 2020 at a cost of P10,000,000. This equipment was…
A: Impairment of assets means reducing the book value of assets when carrying amount is more than…
Q: An entity had the following events and transactions during 2020: - Depreciation for 2019 was…
A: Answer: An entity had the following events and transactions during 2020:- Depreciation for 2019 was…
Q: On January 1, 2021, Smith Company sold a piece of machinery to Gaby Company for P1,900,000. Because…
A: The gain on lease back is recognized only to the proportion of rights transferred to buyer(lessor)…
Q: Renata Corporation paid $366,400 for equipment in 2019 and took $164,880 in standard MACRS…
A: Any sort of income that is taxed at regular rates is referred to as ordinary income.Salaries,…
Q: On 1 January 2019, ABC, Inc. decided to replace its existing machinery which it had acquired on 1…
A: Replacement of Old machinery- 01-01-2019 Purchase of Old machinery=01-01-2016 New machinery…
Q: On February 14, 2022, Frozen Company classified a non-current asset as held for sale. At that time,…
A: As per IFRS 5 when an asset is calssifed as a non-current asset as held…
Q: On April 1, 2018, the Apex Corporation sold a parcel of underdeveloped land to the Applegate…
A: Journal entry: Journal entry is a set of economic events which can be measured in monetary terms.…
Q: On March 1, 2021, Bharat Corporation purchased an equipment for P500,000 with an estimated residual…
A: Barat Corporation's Lease Details for 2021 Cost of Equipment= P500,000 Monthly lease rent= P18,000…
Q: Teal Co. purchased a machine on January 1, 2018, for $588,500. At that time, it was estimated that…
A: Depreciation is the systematic decline in the value of non-current assets as a result of wear and…
Q: An entity had the following events and transactions during 2020: Depreciation for 2019 was…
A: Operating income: A profit that is realized after deducting operating expenses from the sales…
Q: Cullumber Company owns delivery equipment that cost $53,800 and has accumulated depreciation of…
A: Disclaimer: “Since you have posted a question with multiple sub-parts, we will solve first three…
Q: Surreal Company accounted for non-current assets using the revaluation model. On October 1, 2021,…
A: Generally the fixed assets are valued at cost plus cost of…
Q: Surreal Company accounted for non-current assets using the revaluation model. On October 1, 2021,…
A: The revaluation model enables a business to maintain non-current assets at their revalued value.…
Q: On January 1, 2019, Kong Company owned a machinery having a carrying amount of P240,000. The machine…
A: Carrying amount can be defined as the original cost of an asset as reflected in the books of…
Q: Omar Company owns a property which was revalued to $ 625,000 on 31 December 2018 with a revaluation…
A: From the info given in the question it seems that the company…
Q: On January 1, 2018, CRIMSON Company purchased machineries for P10,560,000 and depreciated it by the…
A: Depreciation is considered as an expense charge on the value of the Asset. It can be calculated by…
Q: During 2020, the Hackett Corporation purchased the property listed in the table below for use in its…
A: The Modified accelerated cost recovery system (MACRS) is used to depreciate most of the properties…
Q: At that date, the carrying amount of the land was P5,000,000 and the balance in the revaluation…
A: Impairment loss is the difference in the recoverable amount and carrying of the asset. Recoverable…
Q: The journal entry to record the machinery as held for sale would require a credit to Machinery of…
A: Machinery is a type of asset which falls normally under the category of the fixed assets which is…
Q: On April 30, 2020, Sa Young Nam Company approved a plan to dispose of a segment of its business. At…
A: Answer: The amount that is reported to profit and loss account for 2020 is the portion of profit and…
Q: On January 1, 2019, KRIS KRINGLE Company purchased a ₱600,000 machine, with a five-year useful life…
A: Correct option is C. 36,000 Deferred tax liability as a result of change is P36,000
Q: Nona Co. purchased land worth P20,000,000 on January 1, 2021. The company uses the revaluation model…
A: Under revaluation model, Property plant and equipment is measured at an estimated fair value of the…
Q: In 2022, Leo construction traded in a light duty pickup truck that had a book value of $18,000. A…
A: In 2022, Leo construction bought a light duty pickup truck having a fair market value of $55,236.…
Q: On January 1, 2018, Ameen Company purchased major pieces of manufacturing equipment for a total of…
A: Deferred tax: Deferred Taxes are taxes that will be paid in future period.Deferred Tax is a…
Q: On January 1, 2019, Fur Company purchased a machinery at a cost of P goods 21,000,000 with an…
A: Solution: DDB rate = (1/10)*2 = 20% Accumulated depreciation for 2019 and 2020 = (21000000*20%) +…
Q: in November 4, 2019, Blue Company acquired an asset (27.5-year residential real property) for…
A:
Q: On 1, 2020, Midland Company purchased a machine for P1,400,000. This machine has - year useful…
A: Income tax: It is the amount a person is liable to pay on the earned amount in an accounting year.…
Q: P Ltd has two non-current assets: land and machinery at 30 June 2020. The carrying amount of land is…
A: The value of assets of an entity is liable to change due to internal or external factors. The…
Q: On January 1, 2021, Wilkes Company purchased a used delivery truck for $28,000, paying cash. On…
A: Definition: Journal entry: Journal entry is a set of economic events which can be measured in…
Q: u Ltd. acquired an excavator on January 1, 2020, for ¥10,000 (all amounts in thousands). This…
A: As per International Financial Reporting Standards (IFRS), fixed assets can be subject to fair value…
Q: Surreal Company accounted for non-current assets using the revaluation model. On October 1, 2021,…
A: When the selling price is the asset is more than its Carrying amount or fair value , then it leads…
Q: A manufacturer of shipping equipment decided to lease an equipment with a fair value of P2,500,000…
A: As per the honor code, We’ll answer the first question since the exact one wasn’t specified. Please…
Q: On January 1, 2019, Kong Company owned a machinery having a carrying amount of P240,000. The machine…
A: Depreciation means the fall in value of assets because of wear and tear , usage , passage of time or…
Q: On 1 January 2019, ABC, Inc. decided to replace its existing machinery which it had acquired on 1…
A: Step 1 Depreciation is the written down in the value of assets over the time.
Q: . How much is the gain on leaşeback recorded on January 1, 2021?* For numbers 3 to 5, please refer…
A: The question is related to Accounting for Lease. In case of leaseback transaction the gain is the…
Q: MABC Company reported an impairment loss of P2,000,000 in 2020. This loss was related to an item of…
A: Impairment loss: A reduction in net carrying value (acquisition cost minus depreciation) of an asset…
Q: In June 2021, Titanic Company acquired a machine in exchanged for a non-monetary asset with a cost…
A: As per IFRS if exchange transaction has commercial substance the asset received is to be recognized…
Nona Co. purchased land worth P20,000,000 on January 1, 2021. The company uses the revaluation model in accounting for its PPE.
On December 31, 2021, an independent appraiser valued the land at P43,000,000. But on December 31, 2022, the land had a fair value of P8,000,000.
How much revaluation deficit/impairment loss should be recognized in the income statement on December 31, 2022?
Step by step
Solved in 2 steps
- Gray Companys financial statements showed income before income taxes of 4,030,000 for the year ended December 31, 2020, and 3,330,000 for the year ended December 31, 2019. Additional information is as follows: Capital expenditures were 2,800,000 in 2020 and 4,000,000 in 2019. Included in the 2020 capital expenditures is equipment purchased for 1,000,000 on January 1, 2020, with no salvage value. Gray used straight-line depreciation based on a 10-year estimated life in its financial statements. As a result of additional information now available, it is estimated that this equipment should have only an 8-year life. Gray made an error in its financial statements that should be regarded as material. A payment of 180,000 was made in January 2020 and charged to expense in 2020 for insurance premiums applicable to policies commencing and expiring in 2019. No liability had been recorded for this item at December 31, 2019. The allowance for doubtful accounts reflected in Grays financial statements was 7,000 at December 31, 2020, and 97,000 at December 31, 2019. During 2020, 90,000 of uncollectible receivables were written off against the allowance for doubtful accounts. In 2019, the provision for doubtful accounts was based on a percentage of net sales. The 2020 provision has not yet been recorded. Net sales were 58,500,000 for the year ended December 31, 2020, and 49,230,000 for the year ended December 31, 2019. Based on the latest available facts, the 2020 provision for doubtful accounts is estimated to be 0.2% of net sales. A review of the estimated warranty liability at December 31, 2020, which is included in other liabilities in Grays financial statements, has disclosed that this estimated liability should be increased 170,000. Gray has two large blast furnaces that it uses in its manufacturing process. These furnaces must be periodically relined. Furnace A was relined in January 2014 at a cost of 230,000 and in January 2019 at a cost of 280,000. Furnace B was relined for the first time in January 2020 at a cost of 300,000. In Grays financial statements, these costs were expensed as incurred. Since a relining will last for 5 years, Grays management feels it would be preferable to capitalize and depreciate the cost of the relining over the productive life of the relining. Gray has decided to nuke a change in accounting principle from expensing relining costs as incurred to capitalizing them and depreciating them over their productive life on a straight-line basis with a full years depreciation in the year of relining. This change meets the requirements for a change in accounting principle under GAAP. Required: 1. For the years ended December 31, 2020 and 2019, prepare a worksheet reconciling income before income taxes as given previously with income before income taxes as adjusted for the preceding additional information. Show supporting computations in good form. Ignore income taxes and deferred tax considerations in your answer. The worksheet should have the following format: 2. As of January 1, 2020, compute the retrospective adjustment of retained earnings for the change in accounting principle from expensing to capitalizing relining costs. Ignore income taxes and deferred tax considerations in your answer.At the end of 2020, Magenta Manufacturing Company discovered that construction cost had been capitalized as a cost of the factory building in 2015 when it should have been treated as a cost of production equipment installation costs. As a result of the misclassification, the depreciation through 2018 was understated by 110,000, and depreciation for 2019 was understated by 90,000. What would be the consequences of correcting for the misclassification of the property cost? a. The taxpayer uses the FIFO inventory method, and 25% of goods produced during the period were included in the ending inventory. b. The taxpayer uses the LIFO inventory method, and no new LIFO layer was added during 2019.At the beginning of 2019, Conley Company purchased an asset at a cost of 10,000. For financial reporting purposes, the asset has a 4-year life with no residual value and is depreciated by the straight-line method beginning in 2019. For tax purposes, the asset is depreciated under MACRS using a 5-year recovery period. Prior to 2019, Conley had no deferred tax liability or asset. The difference between depreciation for financial reporting purposes and income tax purposes is the only temporary difference between pretax financial income and taxable income. The current income tax rate is 30%, and no change in the tax rate has been enacted for future years. In 2019 and 2020, taxable income will be higher or lower than financial income by what amount?
- Duck, an accrual basis corporation, sponsored a rock concert on December 29, 2019. Gross receipts were 300,000. The following expenses were incurred and paid as indicated: Because the coliseum was not scheduled to be used again until January 15, the company with which Duck had contracted did not perform the cleanup until January 810, 2020. a. Calculate Ducks net income from the concert for tax purposes for 2019. b. Using the present value tables in Appendix H, what is the true cost to Duck if it had to defer the 100,000 deduction for the performers until 2020? Assume a 5% discount rate and a 21% marginal tax rate in 2019 and 2020.Nona Co. purchased land worth P20,000,000 on January 1, 2021. The company uses the revaluation model in accounting for its PPE. On December 31, 2021, an independent appraiser valued the land at P43,000,000. But on December 31, 2022, the land had a fair value of P8,000,000. How much revaluation deficit/impairment loss should be recognized in the income statement on December 31, 2022? (No need to put "+" or "", just place absolute value)Omar Company owns a property which was revalued to $ 625,000 on 31 December 2018 with a revaluation gain of $250,000 being recognized as other comprehensive income and recorded in the revaluation surplus. At 31, December 2020 the property had a carrying amount of $575,000 but the recoverable amount of the property was estimated at only $250,000. 1- What is the amount of impairment? 2- How the revaluation and the impairment should be treated in the financial statements?
- Annood Company owns land that it purchased at a cost of $700,000 in 2018. The land's recoverable value fluctuate as follows (all amounts as of December 31): 2018, $680,000; 2019, $720,000. The journal entry to record impairment of the land in 2019 would be: a. Debit land account, $20,000, credit impairment loss recovery, $20,000 O b. Debit impairment loss account, $20,000; credit land account, $20,000 O c. Debit land account, 40,000; credit impairment loss recovery, $40,000 O d. No entry is required under IFRS 36.Cake, Inc. purchased a machinery on January 1, 2020, at a cost of P1,250,000. It is being depreciated using the straight-line method over its projected useful life of 8 years. On December 31, 2021, the asset's fair value was P1,125,000. Accordingly, an entry was made on that date to recognize the revaluation surplus. Revaluation is recorded maintaining the proportionate relationship between the asset account and accumulated depreciation. It is the company policy to transfer a portion of revaluation surplus to retained earnings every period. What is the amount of revaluation surplus reported in equity on December 31, 2022?*On February 14, 2022, Frozen Company classified a non-current asset as held for sale. At that time, the asset's carrying amount was P64,000. It's fair value was estimated at P48,000 and the cost to sell at P3,800. On May 9, 2022, the asset was sold for P42,000 and paid transaction costs of P2,000. The company accounts for non-current assets using the cost model. 9. How much impairment loss is to be recorded by Frozen relating to the non-current assets held for sale? 10. At what amount should the non-current assets held for sale be recorded on Feb. 14, 2022? 11. How much gain(loss) is to be reported by Frozen on the disposal of the non-current assets held for sale?
- Shamrock Inc. owns equipment that cost $470,000 and has accumulated depreciation of $122,000. The expected future net cash flows from the use of the asset are expected to be $311,000. The fair value of the equipment is $269,000. Prepare the journal entry, if any, to record the impairment loss. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit CreditWaterway Ltd. owns land that it purchased at a cost of ¥464,000 in 2020. The company chooses to use revaluation accounting to account for the land. The land's value fluctuates as follows (all amounts in thousands as of December 31): 2020, ¥522,000; 2021, ¥417,600; 2022, ¥446,600; 2023, ¥475,600; and 2024, ¥533,600. Complete the following table. (Enter negative amounts using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45).) Value at December 31 2020 2021 2022 2023 2024 ¥ Other Comprehensive Income 58,000 (58,000) 0 11,600 58,000 Accumulated Other Comprehensive Income 58,000 0 0 11,600 69,600 Recognized in Net Income 0 (46,400) 29,000 17,400 0ccCullumber Company owns delivery equipment that cost $53,800 and has accumulated depreciation of $27,300 as of July 30, 2020. On that date, Cullumber disposes of this equipment. For parts b - d below, enter D for debit or C for credit in the first box and the amount in the second box. What is the net book value of the equipment on July 30, 2020? Assume Cullumber scraps the equipment as having no value on July 30. What is the gain or loss, if any, that Cullumber should recognize? Assume Cullumber sells the equipment for $37,200 cash on July 30. What is the gain or loss, if any, that Cullumber should recognize? Assume Cullumber sells the equipment for $18,000 cash on July 30. What is the gain or loss, if any, that Cullumber should recognize?