On July 1, Rudd Company had a delivery van which was destroyedin an accident. On that date, the carrying amount of the van wasP500,000.On July 15, the entity received and recorded a P140,000 invoicefor a new engine installed in the van in May, and another P100,000invoice for various repairs.In August, the entity received P700,000 under an insurance policyon the van, which it plans to use to replace the van.What amount should be reported as gain on disposal of the van inthe income statement?a.b.C.d.200,000700,00060,0000

Gain on disposal of an asset is when the value of insurance claim received is more than the value of…

Answered: On July 1, Rudd Company had a delivery…

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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Integrity Company sold consumer products that are packaged in boxes. The entity offered an unbreakable glass in exchange for two box tops as a promotion during the current year. The cost of the glass was P200. The company sold 200,000 boxes of the product and 40,000 box tops were redeemed during the year. The entity estimated at the end of the year that it would be probable that 50% of the box will be redeemed. The allocated transaction price for the premium is P5,000,000.How much is the Unearned Revenue for Unredeemed Premiums?
gohil sanjay
Do-Good Inc. is a not-for-profit organization that was formed on January 1, 2020. Do-Good has a December 31 year end. It has an accounting policy of capitalizing and amortizing its capital assets. On April 1, 2020, Do-Good purchased equipment costing $8,000. The equipment is estimated to have a useful life of 4 years, with no residual value at that time. This transaction was the only transaction that took place to date. The equipment was purchased from a restricted fund contribution of $8,400. In which fund would the purchase and amortization of the asset be recorded? The General Fund The Capital Fund The Operating Fund The Endowment Fund
On April 1, Year 6, Bob the Builder traded in an equipment with a book value of $2,000 (initial cost $40,000) and paid $50,500 in cash. The old equipment could have been sold for $8,000 at the date of trade-in but was accepted for a trade-in allowance of $9,500 on the new equipment. He estimates that useful life would be 6 years and residual value would be $4,500. On September 1, Year 8, Bob sells this equipment for $35,000. Assume that straight-line depreciation is recognized once at the end of fiscal year (December 31). Assuming Bob adopts half-year convention, what would be gain or loss on the sale of the equipment on September 1, Year 8.
A company purchased a new forging machine to manufacture disks for airplane turbine engines. The new press cost $3,800,000, and it falls into the seven-year MACRS property class. The company has to pay property taxes to the local township for ownership of this forging machine at a rate of 1.2% on the beginning book value of each year.(a) Determine the book value of the asset at the beginning of each tax year.(b) Determine the amount of property taxes over the machine's depreciable life.
SLEEPY company (a VAT-registered company) paid P154,560, inclusive of 12% value added tax for its newly purchased equipment. Other costs incurred relating to this equipment are as follows: freight and insurance cost while in transit, P5,000; cost of moving equipment into place at factory, P2,000; fees paid to technician for testing the equipment, P2,500; special plumbing fixtures required for new equipment, P1,800; insurance paid during the first year of operation, P1,500; maintenance cost incurred during the first year of operation, 2,500. What is the proper cost of the equipment?
Bright Co. received a government grant of 10,000,000 to install and run a windmill in an economically backward area. The entity had estimated that such a windmill would cost 25,000,000 to construct. The secondary condition attached to the grant is that the entity shall hire labor in the area where the windmill is located. The construction was completed on January 1, 2014. The windmill is to be depreciated using the straight-line method over a period of 10 years. What amount of grant income should be recognized for 2014? O2,500,000 1,500,000 O 1,000,000 5,000,000
On December 31, Strike Company traded in one of its batting cages for another one that has a cost of $535,416. Strike receives a trade-in allowance of $32,685.39. The old equipment had an initial cost of $242,114 and has accumulated depreciation of $205,796.90. Depreciation has been recorded up to the end of the year. The difference will be paid in cash. What is the amount of the gain or loss on this transaction? a.gain of $32,685.39 b.no loss or gain will be recorded c.loss of $3,631.71 d.gain of $3,631.71
There was an explosion at the plant on December 23, 2021 with damages estimated at $1,385,000. The company has insurance to cover such incidents totaling $5,000,000 if the incident was an accident and $1,000,000 if it was due to company error. The incident was investigated and the explosion found to be due to a faulty gas tank that was last serviced on July 15, 2021. The company policy was to service every 6 months however industry standards was generally 3 months. Management was advised by legal counsel that there was a high probability the company would be held responsible for the damages. Employees were not injured during the incident however the employees’ union has indicated that there are discussions underway relating to filing a $3,000,000 claim for unsafe working conditions. Prepare the journal entries necessary to record the transactions above using appropriate dates. ii.Prepare the adjusting entries necessary at December 31, 2021 in order to properly report interest expense…
Aukey Smith contributed $1,000,000 to the local homeless shelter on November 1, 2025, stipulating that the contribution be used to purchase a building to provide additional beds for the homeless. The building was purchased at à cost of $1,200,000 on March 31, 2026, with $200,000 coming from surpluses in the general fund. The building has an estimated useful life of 15 years, with no residual value. The shelter capitalizes its capital assets and uses the straight line method to amortize its capital assets, pro-rating for the number of months owned in the years of acquisition and disposal. The shelter has a December 31 year end and uses the deferral method. What journal entry correctly accounts for the building and contribution revenue in the financial statements for the year ending December 31, 2026? 50,000 O Dr. Deferred contribution liability Cr. Contribution revenue Dr. Amortization expense Cr. Capital asset-accumulated amortization Dr. Deferred revenue Dr. Amortization expense Cr.…
At the end of the year the Investment in Bacolod account of the home office isP300,500. However, there are transactions discovered to have errors.•Bacolod branch bought equipment on June 1, 2020 costing P63,800 for thehome office's use and the policy is to record the asset in Bacolod's books.During that time the home office recorded the equipment and credited itsreciprocal account of its Bacolod branch.•The policy of the company regarding the equipment's depreciation is that ithas a life of 8 years with no salvage value and the straight-line method shouldbe used. No entry has been made by the home office and branch.•The home office ships merchandise to Bacolod amounting to P96,700. Bacolodrecorded the transaction as P97,600•Bacolod pays the home office's creditors in the amount of P32,400 and sends adebit memo to the home office.•Upon receipt of the debit memo, the home office debited its reciprocalaccount in the amount of P23,400 twice. What is the net adjustment of the investment…
The NCR Company purchased a varnishing machine for P150,000 on January 1, 2017.The company received a government grant of P13,500 in respect of this asset. Company policy was to depreciate the asset over 4 years on a straight-line basis and to treat the grant as deferred income.Under PAS20 Government grants and government assistant, what should be the carrying amounts of the machine and the deferred income (DI) balance at December 31, 2018? a. Carrying amount – P75,000 ; DI balance – P6,750 b. Carrying amount – P112,500 ; DI balance – P10,125 c. Carrying amount – P81,750 : DI balance – P6,750 d. Carrying amount – P75,000 ; DI balance – P13,500

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