On January 1, 2019, Melody Company entered, as a lessor, into a five-year non-cancelable operating lease of a building it completed constructing earlier that day at a cost of P8, 000, 000. The building has an economic life of 60 years and nil residual value, The company accounts for the building as property, plant and equipment using the cost model because the fair value of the property cannot be determined reliably without undue cost or effort on an ongoing basis, No lease amount is payable for the first four years the lease. The single lease payment of P1,500,000 is due on January 1, 2019. What amount of unearned rental should Melody Company recognize on January 1, 2023? of

On January 1, 2019, Melody Company entered, as a lessor, into a five-year non-cancelable operating lease of a building it completed constructing earlier that day at a cost of P8, 000, 000. The building has an economic life of 60 years and nil residual value, The company accounts for the building as property, plant and equipment using the cost model because the fair value of the property cannot be determined reliably without undue cost or effort on an ongoing basis, No lease amount is payable for the first four years the lease. The single lease payment of P1,500,000 is due on January 1, 2019. What amount of unearned rental should Melody Company recognize on January 1, 2023? of

Name: On January 1, 2019, Melody Company entered, as alessor, into a five-y
Uploaded: 2024-03-05T11:50:36.000Z
Channel: Bartleby
Description: On January 1, 2019, Melody Company entered, as alessor, into a five-year non-cancelable operatinglease of a building it completed constructing earlierthat day at a cost of P8, 000, 000. The building has aneconomic life of 60 years and nil residual v

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

On January, 2021, Joshtin Company owned an investment property which had an original cost of 7,250,000 and useful life of 50 years. On December 31, 2021, the fair value was 6,100,000 and on December 31, 2022, the fair value was 6,000,000. Under the fair value model, what is the expense to be recognized for the year ended December 31, 2022? 0 200,000 100,000 147,000
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 January 1, 2020, Tom Co (A seller-lessee) sells a building to MacCo (an unrelated buyerlessor) for cash of $2,000,000. The fair value of the building at that time is $1,800,000; the carrying amount immediately before the transaction is $1,000,000. At the same time, TomCo enters into a contract with MacCo for the right to use the building for 19 years, with annual payments of $120,000 payable at the end of each year. The interest rate implicit in the lease is 4.5%, which results in a present value of the annual payments of $1,459,200. The transfer of the asset to MacCo has been assessed as meeting the definition of a sale under PSAK 72. Discuss the implication of the transactions and state the journal entries on January 1, 2020
Clara Company purchased equipment for P5,000,000 on January 1, 2021 with a useful life of 10 years and no residual value. On December 31, 2022, the entity classified the asset as held for sale. The fair value of the equipment on December 31, 2022 is P3,300,000 and the cost of disposal is P100,000. On December 31, 2023 , the fair value of the equipment is P3,800,000 and the cost of disposal is P200,000. On December 31, 2023, the entity believed that the criteria for classification as held for sale can no longer be met. Accordingly, the entity decided not to sell the assets but to continue to use it. What amount should be recognized as gain on reclassification of the equipment in 2023?
Wednesday Company purchased equipment for P8,000,000 on January 1, 2023 with a useful life of 10 years and no residual value. on December 31, 2024, Wednesday classified the equipment as held for sale. The fair value of the equipment on December 31, 2024 was P6,000,000 and the cost of disposal P200,000. On December 31, 2025, Wednesday believed that the criteria for classification as held for sale can no longer be met. On such date, the fair value of the equipment was P5,000,000 and the cost of disposal was P100,000. The value in use was determined to be P5,500,000. Accordingly, the entity decided not to sell the asset but to continue to use it. What is the impairment loss to be recognized on December 31, 2024?
On January 2021 Bob Company sells an item of machinery to Jaison Company for its fair value of $300,000. The asset had a carrying amount of $120,000 prior to the sale. The sale represents the satisfaction of a performance obligation, in accordance with IFRS 15 Revenue from Contracts with Customers. Bob Company enters on to a contracte with Jaison Company for the right to use the asset for the next five years. Annual payments of $50,000 are due at the end of each year. The interest rate implicit in the lease is 10%. The present value of the annual lease payments is $190,000. The remaining useful life of the machine is much greater than the lease term. Required: 1. Explain how it will be recorded in the books of Bob Company and show the necessary journal entries. 2. Why do companies prefer lease financing instead of direct purchase? Explain any three valid reasons.
Greg Company was granted a patent on January 1, 2017 and appropriately capitalized P 450,000 of related costs. The entity was amortizing the patent over the useful life of 15 years, During 2020, the entity paid P 150,000 in legal costs in successfully defending an attempted infringement of the patent. After the legal action was completed, the entity sold the patent to the plaintiff for P 750,000. The policy is to take no amortization in the year of disposal. The entry to record the sale of patent in 2020:
On December 31, 2019, Aquinas Company had equipment that had a carrying amount of $300,000 which the company wrote down to its $250,000 fair value. At the end of 2020 it was determined that the fair value of the equipment had risen to $320,000. At December 31, 2020, assuming Aquinas does not intend to dispose of the equipment, how should Aquinas record the change in fair value of the equipment? A. The carrying amount of the equipment should not change except for the depreciation taken in 2020. B. The equipment should reflect the new cost basis of $300,000. C. The equipment should reflect the new cost basis of $320,000. D. The equipment should reflect the new cost basis of $270,000.
On March 1, 2021, Astrid Corporation purchased an equipment for P500,000 with an estimated residual value of P50,000 at the end of its five-year useful life. Astrid Corporation uses the straight-line method of depreciation. The equipment was immediately leased to Covaxin Company for two years at a monthly rental of P18,000 payable at the beginning of the month starting on March 1, 2021. On this date, Covaxin Company paid Astrid Corporation a lease bonus of P12,000. During the year 2021, Astrid incurred insurance and maintenance costs for the equipment of P8,000 and P2,000, respectively. 1. How much is Astrid Corporation's net revenue from this lease for the year ended December 31, 2021?