On June 30, 2020, Happy Corporation reported the following information: Equipment at cost Accumulated depreciation 30,000,000 10,500,000 The equipment was measured using the cost model and depreciated on a straight line basis over 10-year period. On December 31, 2020, the management decided to change the basis of measuring the equipment from the cost model to the revaluation model. The equipment was revalued to the fair value of P27,000,000 with remaining useful life of 5 years. The income tax rate is 30%. What amount should be reported as revaluation surplus on December 31, 2020?

On June 30, 2020, Happy Corporation reported the following information: Equipment at cost Accumulated depreciation 30,000,000 10,500,000 The equipment was measured using the cost model and depreciated on a straight line basis over 10-year period. On December 31, 2020, the management decided to change the basis of measuring the equipment from the cost model to the revaluation model. The equipment was revalued to the fair value of P27,000,000 with remaining useful life of 5 years. The income tax rate is 30%. What amount should be reported as revaluation surplus on December 31, 2020?

Name: On June 30, 2020, Happy Corporation reported the following informatio
Uploaded: 2024-03-05T11:50:36.000Z
Channel: Bartleby
Description: On June 30, 2020, Happy Corporation reported the following information:Equipment at costAccumulated depreciation30,000,00010,500,000The equipment was measured using the cost model and depreciated on a straight line basis over 10-yearperiod. On Decem

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, 2019, Ivanhoe Corporation acquired equipment at a cost of $858000. Ivanhoe adopted the sum-of-the-years’-digits method of depreciation for this equipment and had been recording depreciation over an estimated life of 8 years, with no residual value. At the beginning of 2022, a decision was made to change to the straight-line method of depreciation for this equipment. The depreciation expense for 2022 would be $171600. $107250. $44688. $71500.
On December 31, 2020, the statement of financial position of ABC Company showed the following property and equipment after charging depreciation: Building 3,000,000 Accumulated Depreciation - Building (1,000,000) Equipment 1,200,000 Accumulated Depreciation - Equipment (400,000) The Company has adopted the revaluation model for the valuation of property and equipment. This has resulted in the recognition in prior periods of an asset revaluation surplus for the building of P140,000. On December 31, 2020, an independent valuer assessed the fair value of the building to be P1,600,000 and the equipment to be P900,000. The building and equipment had remaining useful lives of 25 years and 4 years, respectively, as of December 31, 2020. The revaluation surplus as of December 31,2021 is
Parnell Company acquired construction equipment on January 1, 2020, at a cost of $78,400. The equipment was expected to have a useful life of six years and a residual value of $10,000 and is being depreciated on a straight-line basis. On January 1, 2021, the equipment was appraised and determined to have a fair value of $74,500, a salvage value of $10,000, and a remaining useful life of five years. In measuring property, plant, and equipment subsequent to acquisition under IFRS, Parnell would opt to use the revaluation model in IAS 16. Assume that Parnell Company is a U.S.-based company that is issuing securities to foreign investors who require financial statements prepared in accordance with IFRS. Thus, adjustments to convert from U.S. GAAP to IFRS must be made. Ignore income taxes. Required: Prepare journal entries for this equipment for the years ending December 31, 2020, and December 31, 2021, under (1) U.S. GAAP and (2) IFRS. Prepare the entry(ies) that Parnell would make…
Blossom Enterprises purchased equipment on January 1, 2020, at a cost of €405,000. Blossom uses the straight-line depreciation method, a 5-year estimated useful life, and no residual value. At the end of 2020, independent appraisers determined that the assets have a fair value of €330,000. . Prepare the journal entry to record 2020 depreciation using the straight-line method. Account Titles and Explanation Debit Credit Depreciation Expense Accumulated Depreciation-Equipment (To record depreciation expense) please help me fill the table
On march 10, 2023, Sweet Acacia limited sold equipment that it bought for 286800 on August 20, 2026. It was originally estimated that the equipment would have a useful life of 12 years and a residual value of 24000 at the end of that time and depreciation has been calculated on that basis. The company uses the straight line method of depreciation and prepares its financial statement under IFRS. Calculate the depreciation charges on this equipment for 2016 and 2023, and the total charge for the period from 2017 to 2022, inclusive under each of the following six assumptions for partial periods. Depreciation is calculated for the exact period of time during which the asset is owned. Depreciation is calculated for the full year on January 1 balance in the asset account. Depreciation is calculated for the full year on December 31 balance in the asset account Depreciation for a half year is charged on plant assets that are acquired or disposed of during the year. Depreciation is…
On January 1, 2021, Canton Inc. has equipment having a useful life of 10 years with the following cost and accumulated depreciation. The company uses straight-line method in depreciating its equipment.Equipment-P500,000Accumulated depreciation-P150,000On December 31, 2021, after recording depreciation expense for the year, the equipment was subjected to an assessment and it was found to be impaired due to obsolescence and physical damage. Canton Inc. has determined the following:Undiscounted cash flows of the equipment-P310,000Fair value of the equipment less cost to sell-P225,000Discounted cash flows of the equipment-P250,000 On December 31, 2021, Canton Inc. recognizes an impairment loss at?
At the beginning of 2021, Westglow Company purchased equipment for $525,000 that was assigned an estimated useful life of 5 years and an estimated salvage value of $50,000. The company uses straight-line depreciation for all of its plant and equipment. When preparing adjusting entries at December 31, 2024, it was discovered that the bookkeeper had failed to deduct the salvage value in computing the depreciation base for 2021, 2022, and 2023. Westglow issues 2-year comparative financial statements. Which of the following statements describes the procedure that should be followed at December 31, 2024? Answer a. Westglow should compute the amount of annual depreciation expense that should have been recorded for 2023 and adjust accumulated depreciation and depreciation expense for the difference. The financial statements for 2023 should be restated and the effect of the error should be reported as an adjustment to the beginning balance of retained earnings for 2024. b.…
On December 31, 2021, Joy Company reported the following information: Equipment 6,250,000 Accumulated depreciation 2,187,500 The equipment was measured using the cost model and depreciated on a straight-line basis over a 10-year period. On the same date, the management decided to change the basis of measuring the equipment from the cost model to the revaluation model. The equipment had a fair value of P5,687,500 with remaining useful life of 5 years on December 31, 2021. What amount should be reported as revaluation surplus on December 31, 2021? What is the depreciation of the equipment for 2022? What amount should be reported as revaluation surplus on December 31, 2022?
A company purchased a piece of equipment for $30,000 on January 1, 2019. Management estimates salvage value of $3,000 and a useful life of five years. It uses the straight‐line method of depreciation. Where applicable, it applies the half‐year rule. On December 31, 2021 the equipment’s fair value is estimated to be $3,000. What is the impairment loss for 2021? $3,000 $5,400 $7,800 $10,800
Parnell Company acquired construction equipment on January 1, 2020, at a cost of $70,100. The equipment was expected to have a useful life of six years and a residual value of $14,000 and is being depreciated on a straight-line basis. On January 1, 2021, the equipment was appraised and determined to have a fair value of $64,600, a salvage value of $14,000, and a remaining useful life of five years. In measuring property, plant, and equipment subsequent to acquisition under IFRS, Parnell would opt to use the revaluation model in IAS 16. Assume that Parnell Company is a U.S.-based company that is issuing securities to foreign investors who require financial statements prepared in accordance with IFRS. Thus, adjustments to convert from U.S. GAAP to IFRS must be made. Ignore income taxes. 1) Record the entry for recording profit on revaluation of equipment due to conversion from U.S. GAAP to IFRS. 2) Record the entry for additional depreciation expense on revaluation of equipment due to…
On January 1, 2022, Oriole Corporation acquired equipment at a cost of $759000. Oriole adopted the sum-of-the-years-digits method of depreciation for this equipment and had been recording depreciation over an estimated life of 8 years, with no residual value. At the beginning of 2025, a decision was made to change to the straight-line method of depreciation for this equipment. Depreciation expense for 2025 would be $63250. $151800. O $94875. O $39531.