On July 1, 2018, Apache Company, a real estate developer, sold a parcel of land to aconstruction company for $4,200,000. The book value of the land on Apache's bookswas $1,800,000. Terms of the sale required a down payment of $300,000 and 13annual payments of $300,000 plus interest at an appropriate interest rate due on eachJuly 1 beginning in 2019.How much revenue will Apache recognize for the sale (ignoring interest), assuming thatit recognizes revenue at the point in time at which it transfers the land to theconstruction company? (Leave no cells blank - be certain to enter "O" whereverrequired.)20182019Revenue

Accrual basis accounting: According to this basis of accounting, revenue should be recognized at the…

Answered: On July 1, 2018, Apache Company, a real…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On January 1, 20A1, Mangosteen leased its land to Gumamela for a period of 15 years for P200,000 monthly. Mangosteen also charged Gumamela real property tax (RPT) on the land for P20,000 monthly. Gumamela constructed a building on said land. The building was completed on October 1, 20A1 with total construction costs of P5,000,000, which represents its fair market value at the time of completion. The building will be transferred to Mangosteen at the end of the lease term. The building had an estimated useful life of 40 years. However, Gumamela terminated the lease on September 30, 20A8. It paid penalty of P1,200,000 for the termination of the contract. Required: Determine the annual gross income that will be reported by Mangosteen for the entire term of the lease under the two allowable methods in recognizing income.
On July 1, 2025, Concord Inc. made two sales. 1. It sold land having a fair value of $907,040 in exchange for a 4-year zero-interest-bearing promissory note in the face amount of $1,427,241. The land is carried on Concord's books at a cost of $596,000. 2. It rendered services in exchange for a 3%, 8-year promissory note having a face value of $406,680 (interest payable annually). Concord Inc. recently had to pay 8% interest for money that it borrowed from British National Bank. The customers in these two transactions have credit ratings that require them to borrow money at 12% interest. Record the two journal entries that should be recorded by Concord Inc. for the sales transactions above that took place on July 1. 2025. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275. If no entry is required, select "No Entry for the account titles and enter O for the amounts, Credit account titles are automatically indented…
Mac sold a tract of land with a carrying amount of P3,000,000 to Poon July 1, 2018. 1,200,000 was collected on the date of sale, and the balance of P2,800,000 is collectible in four annual installments P902,500, consisting of principal and 11% interest on the unpaid balance. The first annual installment is due July 1, 2019. What amount of notes receivable should be classified as noncurrent assets on December 31, 2019? a. 2,800,000 b. 1,210,500 c.1,545,605 d. 2,205,500
16. Buttercup Company leased a property to Dickies Corporation on January 1, 2020 for a period of 8 years ending December 31, 2027. The first payment happened on January 1, 2020 amounting to P900,000. Buttercup Company had previously purchased the equipment for P4,800,000 from a supplier that Buttercup has been transacting with in the past years. Buttercup has been selling the same property on its ordinary course of business. The present value on January 1, 2020 of all rent payments over the lease term discounted at a 10% interest rate was P5,280,000. What amount of unearned interest revenue should be recognized as realized in 2021? * a. P490,000 O b. P480,000 c. P438,000 O d. P391,800
On January 1, 2020, ABC corporation received P8,000,000 from the City of Caloocan to construct an overpass in the intersection of Camarin. The cost of the overpass is P25,000,000, with a useful life of 20 years. How much is the carrying value of the overpass as of December 31, 2021 assuming ABC used the deduction to asset approach?
On April 7, 2024, Crane Corporation purchased two excavators at auction for a combined total cost of $338,000. The excavators were listed in the auction catalogue at $138,000 for excavator A and $284,000 for excavator B. Immediately after the auction, Crane had the excavators professionally appraised so it could purchase adequate insurance coverage. The appraisal put a fair value of $112,520 on excavator A and $275,480 on excavator B. On April 10, Crane paid a total of $4,000 in transportation charges for the two excavators. On April 28, Crane paid $9,000 for improvements to excavator B and no further expenditures were made for excavator A. On April 30, 2024, both excavators were ready to be used. The company expects excavator A to last eight years and to have a residual value of $7,800 when it is removed from service, and it expects excavator B to be useful for six more years and have a residual value of $19,300 at that time. Due to the different characteristics of the two excavators,…
Sanchez Development Company uses the installment sales method to account for some of its installment sales.On October 1, 2018, Sanchez sold a parcel of land to the Kreuze Corporation for $4 million. This amount wasnot considered significant relative to Sanchez’s other sales during 2018. The land had cost Sanchez $1.8 millionto acquire and develop. Terms of the sale required a down payment of $800,000 and four annual payments of$800,000 plus interest at an appropriate interest rate, with payments due on each October 1 beginning in 2019.Kreuze paid the down payment, but on October 1, 2019, defaulted on the remainder of the contract. Sanchezrepossessed the land. On the date of repossession the land had a fair value of $1.3 million.Required:Prepare the necessary entries for Sanchez to record the sale, receipt of the down payment, and the default andrepossession applying the installment sales method. Ignore interest charges.On April 1, 2018, the Apex Corporation sold a parcel of…
Milk Tea Company acquired a property consisting of land and a building through foreclosure on December 1, 2021. The property was acquired for P 7,000,000 in a lump sum and estimated to benefit the company for 10 years. Milk Tea will not transfer the property to the buyer until it has completed refurbishing to increase its market value. On December 31, 2021, Milk Tea incurred a total of P500,000 for the partial refurbishing, and the property is now selling for P7,600,000. In its December 31, 2021 statement of financial position, at what amount should Milk Tea Company report the held for sale property? P7,600,000 P7,100,000 P0 P6,300,000
On January 1, 2019, Her Highness Hortense Co. purchased a patent for $1,904,000. The patent is being amortized over its remaining legal life of 15 years expiring on January 1, 2034. During 2022, HHH determined that the economic benefits of the patent would not last longer than ten years from the date of acquisition. What amount should be reported in the balance sheet for the patent, net of accumulated amortization, at December 31, 2022?
* Explain.
Brian acquired a rental house in 2003 for a cost of $80,000. Straight-line depreciation on the property of $26,000 has been claimed by Brian. In January 2019, he sells the property for $120,000, receiving $20,000 cash on March 1 and the buyer's note for $100,000 at 10 percent interest. The note is payable at $10,000 per year for 10 years, with the first payment to be received 1 year after the date of sale. Calculate his taxable gain under the installment method for the year of sale of the rental house. In your computations, round any division to two decimal places. Gain reportable in 2019 is $.
In 2021 an investor sold capital property for $80,000. The cost base of the property was $55,000. The investor agreed to the following payment schedule: $35,000 in 2021, $25,000 in 2022 and $20,000 in 2023. The investor elects to use the deferred proceeds method to report taxable income from this sale. How much would be the taxable capital gain reported by the investor in 2021? A. $20,000 B. $14,063 C. $10,938 D. $10,000 E. None of the above

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