On January 3, 2010, Boyer Corp. owned a machine that had cost $200,000. The accumulated depreciation was $120,000, estimated salvage value was $12,000, and fair market value was $320,000. On January 4, 2010, this machine was irreparably damaged by Pine Corp. and became worthless. In October 2010, a court awarded damages of $320,000 against Pine in favor of Boyer. At December 31, 2010, the final outcome of this case was awaiting appeal and was, therefore, uncertain. However, in the opinion of Boyer's attorney, Pine's appeal will be denied. At December 31, 2010, what amount should Boyer accrue for this gain contingency? O 200,000 O 260,000 None of these O 320,000

On January 3, 2010, Boyer Corp. owned a machine that had cost $200,000. The accumulated depreciation was $120,000, estimated salvage value was $12,000, and fair market value was $320,000. On January 4, 2010, this machine was irreparably damaged by Pine Corp. and became worthless. In October 2010, a court awarded damages of $320,000 against Pine in favor of Boyer. At December 31, 2010, the final outcome of this case was awaiting appeal and was, therefore, uncertain. However, in the opinion of Boyer's attorney, Pine's appeal will be denied. At December 31, 2010, what amount should Boyer accrue for this gain contingency? O 200,000 O 260,000 None of these O 320,000

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

On January 1, 2020, ABC Corp acquired a piece of machinery for $500,000. The machinery has an estimated useful life of 10 years and a residual value of $50,000. ABC Corp decided to use the double-declining balance method for depreciation. Additionally, the company incurred $15,000 in transportation costs and $5,000 in installation costs to get the machinery ready for use. Furthermore, on December 31, 2021, the company conducted an impairment test and determined that the machinery's recoverable amount is $450,000, and its fair value is $420,000. The company expects to use the machinery for the remaining estimated useful life. Prepare the necessary journal entries for ABC Corp related to the machinery for the year 2020 and 2021, including depreciation, impairment, and any adjusting entries needed at the end of each year
Mazaya company has decided to sell one of its old machines on June 30, 2011. The machine was purchased for $120,000 on January 1, 2007, and was depreciated on a straight-line basis for 10 years with no residual value. If the machine was sold for $33,000, what was the amount of the gain or loss recorded at the time of the sale?
On January 1, 2019, Uptown Builders purchased a machine for $200,000. Uptown's policy is to depreciate this type of machinery using straight-line depreciation, over five years, with no residual value. Because of a bookkeeping error, no depreciation was recognized in Uptown's 2019 or 2020 financial statements. The error was discovered during the preparation of the 2021 financial statements. Ignoring income taxes, the impact of this error on retained earnings prior to any 2021 adjustments is: Question 8 options: Overstatement of $80,000 Understatement of $120,000 Understatement of $80,000 Overstatement of $120,000
Superb Corporation is being sued for illness caused to local residents as a result of negligence on the company's part in permitting the local residents to be exposed to highly toxic chemicals from its plant. Superb’s lawyer states that it is probable that Superb will lose the suit and be found liable for a judgment costing Superb anywhere from $1,200,000 to $6,000,000. However, the lawyer states that the most probable cost is $3,600,000. As a result of the above facts, Superb should accrue Select one: a loss contingency of $3,600,000 and disclose an additional contingency of up to $2,400,000. a loss contingency of $3,600,000 but not disclose any additional contingency. a loss contingency of $1,200,000 and disclose an additional contingency of up to $4,800,000. no loss contingency but disclose a contingency of $1,200,000 to $6,000,000.
8. On January 1, 2008, Flax Company purchased a machine for P5,280,000 and depreciated it by the straight line method using an estimated useful life of eight years with no residual value. On January 1, 2011, Flax determined that the machine had a useful life of six years from the date of acquisition and will have a residual value of P480,000. An accounting change was made in 2011 to reflect these additional data. What is the accumulated depreciation for the machine on December 31, 2011? O a. 2,920,000 b. 3,080,000 c. 3,200,000 d. 3,520,000
On January 3, 2020, Acme Corp. owned a machine that had cost P300,000. The accumulated depreciation was P180,000, estimated salvage value was P18,000, and fair market value was P480,000. On January 4, 2020, this machine was irreparably damaged by Reed Corp. and became worthless. In October 2020, a court awarded damages of P480,000 against Reed in favor of Acme. At December 31, 2020, the final outcome of this case was awaiting appeal and was, therefore, uncertain. However, in the opinion of Acme’s attorney, Reed’s appeal will be denied. At December 31, 2020, what amount should Acme accrue for this gain contingency?
Mr. Wonder purchased a machine amounting to P7,000,000 on January 1, 2013 providing the newest kind of technology to improve their operations. It has a useful life of 20 years and a salvage value of P500,000. However, on June 30, 2018, they decided to dispose it to liquidate some of its debts. Therefore, they classified it as held for sale. The fair value of the machine on that date P5,100,000 and the cost of disposal is P100,000. On November 30, 2019, the company decided again to continue to use it since they were able to obtain funding from their investors through follow-on offering of additional shares to pay their currently maturing obligations. On this date, the fair value of the machine is P4,900,000 and the cost of disposal is P50,000. How much is the gain or loss in the reclassification in 2019? *
The Seliger Company has a building that it originally bought for $100,000. As of December 31, 2012, there is $10,000 of Accumulated Depreciation on the building (it was being straight-line depreciated over 10 years with no salvage value). On January 1, 2013, Seliger decides to change the remaining useful life to 5 years (starting now) with a $50,000 salvage value. What will be the depreciation on the building in 2013? $20,000 $10,000 $8,000 $12,500 $13,000 O O O O O
Please solve this problem
vvv Limited purchased a machine for $300,000 cash on 1 July 2005. The useful life of the machine is 10 years, no residual value and straight line method for depreciation. The company uses the revaluation model. On 31 December 2005, the fair value was $332,500 for the machine. On 31 December 2006, the fair value was $280,500 for the machine. The machine has a fair value of $302,250 on 31 December 2007 and $250,950 on 31 December 2008. Required: Provide the journal entries related to machine.
On January 1, 2001, MM Inc. constructed a building classified as owner occupied property at a cost of P3,000,000 with no residual value and useful life of 10 years. On December 31, 2002, there is objective evidence of impairment of the building and its value in use is measured at P1,600,000 while its fair value less cost to sell is at P1,500,000. On December 31, 2004, the value in use of the building is at P2,300,000 while its fair value less cost to sell is P1,700,000. Required: Based on the result of your audit, determine the following:__________1. Impairment loss for the year ended December 31, 2002__________2. Carrying amount of building on December 31, 2002__________3. Depreciation expense for the year ended December 31, 2003__________4. Carrying amount of building on December 31, 2004__________5. Gain on reversal of impairment loss for the year ended December 31, 2004__________6. Depreciation expense for the year ended December 31, 2005
Smith Company is an IFRS reporter. After 3 full years of use, the Smith Company revalues equipment with a carrying value of $970,000 to its fair value of $1,190,000 using the accumulated depreciation elimination method. The original cost of the equipment is $1,390,000 and the equipment has a useful life of 10 years with no scrap value. Smith depreciates under the straight-line method. What is the new carrying value of the asset? Group of answer choices $970,000 $1,390,000 $1,110,000 $1,190,000