On December 1, Young Corporation exchanged 5,000 shares of its P25 par value common stock held in treasury for a parcel of land to be held for a future plant site. The treasury shares were acquired by Young at a cost of P40 per share, and on the exchange date the common shares of Young had a fair market value of P50 per share. Young received P9,000 for selling scrap when an existing building on the property was removed from the site. Based on these facts, the land should be capitalized at P250,000 P200,000 P191,000 P241,000

On December 1, Young Corporation exchanged 5,000 shares of its P25 par value common stock held in treasury for a parcel of land to be held for a future plant site. The treasury shares were acquired by Young at a cost of P40 per share, and on the exchange date the common shares of Young had a fair market value of P50 per share. Young received P9,000 for selling scrap when an existing building on the property was removed from the site. Based on these facts, the land should be capitalized at P250,000 P200,000 P191,000 P241,000

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

PUP CAF Company acquired a property for speculation purposes with the intention of selling it at a higher price in the long-term. The property was acquired at a cash price of P3,000,000. The property has P100,000 unpaid real property tax assumed by PUP CAF Company. In addition, the company also paid the following transaction costs: broker’s commission of P20,000 and registration cost of P35,000. How much PUP CAF should record as Investment Property?
On December 1, 20X0, AKE Pte Ltd paid $5,000 to a Real Estate consulting company for a market report of the property market. The market survey was favourable and AKE Pte Ltd decided to make an entry into the property market. On January 1, 20X1 the company purchased two buildings paying $800,000 for Building X and $1,200,000 for Building Y. The company paid $20,000 to the property agent and incurred an additional $80,000 legal fee to finalise the transaction. Both buildings have useful life of 40 years and zero residual value. The company uses straight- line method for depreciation of all its non-current assets. The company intends to use Building X as their office and rent out Building Y. The company adopts revaluation model for its PPE and fair value model for its investment property. Any accumulated depreciation at the date of the revaluation will be eliminated against the gross carrying amount of the asset. At the end of the year 20X1, values of the two buildings were as below:…
Mumtaj, Inc. is acquiring equipment as follows: Krafton will pay cash of $500,000 and sign a non-interest bearing note with a face amount of $1,661,000.The fair value (i.e. market value) of equipment on 3/31/2021 is $1,500,000The equipment will be placed in operations on the acquisition date with an expected life of 10 years. Krafton Company uses straight-line depreciation and expects no salvage value.The face amount is payable 3 years from the date of acquisition (3/31/2021). Carter Company uses a calendar year for its fiscal year. Carter Company can currently obtain loans from its banks at an interest rate of 10%Prepare an amortization table for the note payable and all necessary journal entries for the year ended 12/31/2021 including, as appropriate, adjusting entries.
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 × ×…
Crane Corporation acquires a coal mine at a cost of $404,000. Intangible development costs total $101,000. After extraction has occurred, Crane must restore the property (estimated fair value of the obligation is $80,800), after which it can be sold for $161,600. Crane estimates that 4,040 tons of coal can be extracted.If 707 tons are extracted the first year, prepare the journal entry to record depletion. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount
Appendix EX 20-27 Equivalent units of production and related costs The charges to Work in Process-Baking Department for a period as well as informa- tion concerning production are as follows. The Baking Department uses the average cost method, and all direct materials are placed in process during production. Work in Process-Baking Department Bal., 900 units, 40% completed 2,466 To Finished Goods, 8,100 units Direct materials, 8,400 units 34,500 Direct labor 16,200 Factory overhead Bal., 1,200 units, 60% completed 8,574 Determine the following: a. The number of whole units to be accounted for and to be assigned costs b. The number of equivalent units of production c. The cost per equivalent unit The cost of unito
Janrel Company entered into a contract to acquire a new machine for its factory. The machine, which had a cash price of P2,000,000 was paid as follows: down payment, P400,000, note payable in 3 equal annual installments, P1,200,000, 20,000 ordinary shares with a par value of P25,000 and fair value of P40 per share, P800,00O. Prior to the machine's use, installation cost of P50,000 was incurred. The machine has an estimated residual value of P100,000. What is the initial cost of the machine?
s
Corazon Company purchased an asset with a list price of $17,600. Corazon paid $1,400 of transportation-in cost, $1,700 to train an employee to operate the equipment, and $1,100 to insure the asset against theft after it has been set up in the factory. The asset was purchased under terms 1/20, n/30 and Corazon paid for the asset within the discount period. Based on this information, Corazon would capitalize the asset on its books at: Multiple Choice O O O $19,124. $17,600. $19,300. $20,524.
Choose the right answer
During its inception, Devon Company purchased land for $250,000 and a building for $200,000. After exactly 3 years, it transferred these assets and cash of $50,000 to a newly created subsidiary, Regan Company, in exchange for 20,000 shares of Regan's $10 par value stock. Devon uses straight-line depreciation. Useful life for the building is 20 years, with zero residual value. An appraisal revealed that the building has a fair value of $250,000. What will Devon record as Additional Paid in Capital as a result of this transaction? Group of answer choices additional paid-in capital of $0. additional paid-in capital of $270,000. additional paid-in capital of $350,000. additional paid-in capital of $300,000.
Below are transactions related to Martinez Company. The City of Pebble Beach gives the company 5 acres of land as a plant site. The fair value of this land is determined to be $87,350. (a) 13,000 shares of common stock with a par value of $55 per share are issued in exchange for land and buildings. The property has been appraised at a fair value of $873,500, of which $175,190 has been allocated to land and $698,310 to buildings. The stock of Martinez Company is not listed on any exchange, but a block of 100 shares was sold by a stockholder 12 months ago at $71 per share, and a block of 200 shares was sold by another stockholder 18 months ago at $63 per share. (b) (c) No entry has been made to remove from the accounts for Materials, Direct Labor, and Overhead the amounts properly chargeable to plant asset accounts for machinery constructed during the year. The following information is given relative to costs of the machinery constructed. Materials used $11,300 Factory supplies used 846…