Financial accounting On January 1, 2014, Jason Company, an 70% ownedsubsidiary of Vinto, Inc., transferred equipment with an 8useful-year life to Vinto in exchange for $80,000 cash. At thedate of transfer, Jason's records carried the equipment at acost of $120,000 less accumulated depreciation of $56,000.Straight-line depreciation is used. Jason reported netincome of $40,000 and $35,000 for 2014 and 2015,respectively. All net income effects of the intra-entitytransfer are attributed to the seller for consolidationpurposes.Compute the gain recognized by Jason Company relatingto the equipment for 2014.

Step 1: Define Net IncomeNet income is the amount left over after deducting the cost of goods sold,…

Answered: On January 1, 2014, Jason Company, an…

Principles of Accounting Volume 1

19th Edition

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Chapter11: Long-term Assets

Section: Chapter Questions

Problem 11PB: On May 1, 2015, Zoe Inc. purchased Branta Corp. for $15,000,000 in cash. They only received...

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On January 1, 2014, Klinefelter Company purchased a building for 520,000. The building had an estimated life of 20 years and an estimated residual value of 20,000. The company has been depreciating the building using straight-line depreciation. At the beginning of 2020, the following independent situations occur: a. The company estimates that the building has a remaining life of 10 years (for a total of 16 years). b. The company changes to the sum-of-the-years-digits method. c. The company discovers that it had ignored the estimated residual value in the computation of the annual depreciation each year. Required: For each of the independent situations, prepare all journal entries related to the building for 2020. Ignore income taxes.
On July 15, 2018, Cottonwood Industries sold a patent and equipment to Roquemore Corporation for $750,000and $325,000, respectively. The book value of the patent and equipment on the date of sale were $120,000 and$400,000 (cost of $550,000 less accumulated depreciation of $150,000), respectively. Prepare the journal entriesto record the sales of the patent and equipment.
On September 3, 2018, the Robers Company exchanged equipment with Phifer Corporation. The facts of theexchange are as follows:Robers’ Asset Phifer’s AssetOriginal cost $120,000 $140,000Accumulated depreciation 55,000 63,000Fair value 75,000 70,000To equalize the exchange, Phifer paid Robers $5,000 in cash.Required:Record the exchange for both Robers and Phifer. The exchange has commercial substance for both companies.
Durler Company purchased equipment on January 2, 2016, for $112,000. The equipment had an estimated useful life of 5 years with an estimated salvage value of $12,000. Durler uses straight-line depreciation on all assets. On January 2, 2020, Durler exchanged this equipment plus $12,000 in cash for newer equipment. The old equipment has a fair value of $50,000. ACCOUNTING Prepare the journal entry to record the exchange on the books of Durler Company. Assume that the exchange has commercial substance. ANALYSIS How will this exchange affect comparisons of the return on asset ratio for Durler in the year of the exchange compared to prior years? PRINCIPLES How does the concept of commercial substance affect the accounting and analysis of this exchange?
On September 30, 2020 AssetsToGo Company (ATG) agreed to an exchange of assets with another company. ATG gave up a machine with an original cost of $50,000. $30,000 in accumulated depreciation had been recorded on this machine over the course of ATG’s ownership. ATG determined that the machine being given up had a fair value of $18,000. ATG also paid $7,000 in cash. Assume that ATG follows IFRS and that the transaction has commercial substance.You have recently been hired in the accounting department of ATG and are preparing the entries to record the exchange of assets. What is the net carrying value of the machine on September 30, 2020 immediately prior to the exchange on ATG’s books? What is the total cost to ATG of the…
On September 30, 2020 AssetsToGo Company (ATG) agreed to an exchange of assets with another company. ATG gave up a machine with an original cost of $50,000. $30,000 in accumulated depreciation had been recorded on this machine over the course of ATG’s ownership. ATG determined that the machine being given up had a fair value of $18,000. ATG also paid $7,000 in cash. Assume that ATG follows IFRS and that the transaction has commercial substance.You have recently been hired in the accounting department of ATG and are preparing the entries to record the exchange of assets. What is the net carrying value of the machine on September 30, 2020 immediately prior to the exchange on ATG’s books? What is the total cost to ATG of the…
Janes Company provided the following information on intangible assets: a. A patent was purchased from the Lou Company for $1,450,000 on January 1, 2022. Janes estimated the remaining useful life of the patent to be 10 years. The patent was carried on Lou's accounting records at a net book value of $500,000 when Lou sold it to Janes. b. During 2024, a franchise was purchased from the Rink Company for $650,000. The contractual life of the franchise is 10 years and Janes records a full year of amortization in the year of purchase. c. Janes incurred research and development costs in 2024 as follows: Materials and supplies Personnel Indirect costs Total $ 155,000 195,000 75,000 $425,000 d. Effective January 1, 2024, based on new events that have occurred, Janes estimates that the remaining life of the patent purchased from Lou is only five more years. Required: 1. Prepare the entries necessary for years 2022 through 2024 to reflect the above information. 2. Prepare a schedule showing the…
On January 1, 2016, Jungle Company sold a machine to Safari Company for $30,000. The machine had an original cost of $24,000, and accumulated depreciation on the asset was $9,000 at the time of the sale. The machine has a 5-year remaining life and will be depreciated on a straight-line basis with no salvage value. Safari Company is an 80%-owned subsidiary of Jungle Company.1. Explain the adjustments that would have to be made to arrive at consolidated net income for the years 2016 through 2020 as a result of this sale.2. Prepare the elimination that would be required on the December 31, 2016, consolidated worksheet as a result of this sale. 3. Prepare the entry for the December 31, 2017, worksheet as a result of this sale.
On January 1, 2012, Sterling Enterprises purchased.... Please answer the general accounting question
Janes Company provided the following information on intangible assets: A patent was purchased from the Lou Company for $1,400,000 on January 1, 2022. Janes estimated the remaining useful life of the patent to be 10 years. The patent was carried on Lou’s accounting records at a net book value of $490,000 when Lou sold it to Janes. During 2024, a franchise was purchased from the Rink Company for $640,000. The contractual life of the franchise is 10 years and Janes records a full year of amortization in the year of purchase. Janes incurred research and development costs in 2024 as follows: Materials and supplies $ 154,000 Personnel 194,000 Indirect costs 74,000 Total $ 422,000 Effective January 1, 2024, based on new events that have occurred, Janes estimates that the remaining life of the patent purchased from Lou is only five more years. Required: Prepare the entries necessary for years 2022 through 2024 to reflect the above information. Prepare a schedule showing the…
Janes Company provided the following information on intangible assets: a. A patent was purchased from the Lou Company for $700,000 on January 1, 2022. Janes estimated the remaining useful life of the patent to be 10 years. The patent was carried on Lou's accounting records at a net book value of $350,000 when Lou sold it to Janes. b. During 2024, a franchise was purchased from the Rink Company for $500,000. The contractual life of the franchise is 10 years and Janes records a full year of amortization in the year of purchase. c. Janes incurred research and development costs in 2024 as follows: Materials and supplies Personnel Indirect costs Total $ 140,000 180,000 60,000 $ 380,000 d. Effective January 1, 2024, based on new events that have occurred, Janes estimates that the remaining life of the patent purchased from Lou is only five more years. Required: 1. Prepare the entries necessary for years 2022 through 2024 to reflect the above information. 2. Prepare a schedule showing the…
On January 1, 2008, Minco Corporation purchased, for $100,000, equipment having a useful life of eight years and an estimated salvage value of $4,000. Minco has recorded monthly depreciation of the equipment on the straight-line method. On January 1, 2013, the equipment was sold for $38,000. As a result of this sale, Minco should recognize a. $0b. a $1,500 gainc. a $1,000 lossd. a $2,000 loss

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