Qec Inc. bought machinery worth $120,000 on January 1st, 2014. With no residual value, it estimated a useful life of 10 years. It is now January 1st, 2021, and the company decided to switch to the double-declining-balance method for this machinery. Also, the company discovered that the original cost of the equipment incorrectly included a cleaning charge for the machinery, amounting to $10,000. Required: a. Prepare the appropriate correcting entry for the machinery capitalization error discovered in year 2021. b. Prepare the journal entry to the change in depreciation methods for the year 2021, recorded on December 31st, 2021. c. In the year 2021, Lockin Inc. exchanged machinery used in its business for machinery used in the business of Qec Inc. The following information pertains to the exchange: Lockin Inc. Qec Inc. Machinery $100,000 $110,000 Accumulated Depreciation 93,000 99,000 Fair Value of Equipment 8,000 14,000 Cash Given Up 2,000 Prepare the journal entries to record the exchange on the books of both companies if: į. The exchange has commercial substance ii. The exchange lacks commercial substance с.

Qec Inc. bought machinery worth $120,000 on January 1st, 2014. With no residual value, it estimated a useful life of 10 years. It is now January 1st, 2021, and the company decided to switch to the double-declining-balance method for this machinery. Also, the company discovered that the original cost of the equipment incorrectly included a cleaning charge for the machinery, amounting to $10,000. Required: a. Prepare the appropriate correcting entry for the machinery capitalization error discovered in year 2021. b. Prepare the journal entry to the change in depreciation methods for the year 2021, recorded on December 31st, 2021. c. In the year 2021, Lockin Inc. exchanged machinery used in its business for machinery used in the business of Qec Inc. The following information pertains to the exchange: Lockin Inc. Qec Inc. Machinery $100,000 $110,000 Accumulated Depreciation 93,000 99,000 Fair Value of Equipment 8,000 14,000 Cash Given Up 2,000 Prepare the journal entries to record the exchange on the books of both companies if: į. The exchange has commercial substance ii. The exchange lacks commercial substance с.

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

In 2024, internal auditors discovered that PKE Displays, Incorporated, had debited an expense account for the $350,000 cost of a machine purchased on January 1, 2021. The machine’s useful life was expected to be five years with no residual value. Straight-line depreciation is used by PKE. Ignoring income taxes, prepare the journal entry PKE will use to correct the error (before adjusting and closing entries). Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
Please help me with correct answer thanku
On Jan 1, 2021, ABC Company acquired a machinery at a cost of P250,000. It was estimated to have a useful life of 10 years and no residual value. The company uses the cost model to account for the machinery and the straight-line method is used in depreciating the machinery. On Dec 31, 2022, the company tested the machinery for possible impairment and determined that the recoverable value of the said machinery amounted to P150,000. On Dec 31, 2023, it was revealed that the recoverable value of the machinery had increased to P187,500. Q-29. 8.How much is the impairment loss reported in 2022? 9.What is the carrying amount of the machinery on Dec 31, 2023 before reversal of impairment? 10.What is the carrying amount of the machinery on Dec 31, 2023 on the basis that it was not impaired? 11.What amount of gain on reversal of impairment should be reported in profit or loss for 2023?
Atomic Corporation has a June 30th year end. It has used straight line depreciation on its reactor since its purchase for $912,800 January 1, 2018 based on expectations of a ten year life. No salvage value was estimated. At the beginning of the fiscal year of July 1st, 2022 , management realized that that the reactor life was in reality only 4 years. This is considered a change in accounting estimate and you are asked to solve it. Required 1: What is the amount of Depreciation Expense reported for the year ended June 30th, 2022? $ Required 2: What is the amount of Depreciation Expense to be reported for the year ended June 30th, 2023? $ Required 3: What is the amount of Accumulated Depreciation that is retroactively recognized on July 1st 2022 when the remaining useful life is re-estimated? $ Required 4: What is the Net Book Value of the reactor on June 30th, 2022? $ Required 5: What is the Net Book Value of the reactor on December 31st, 2022? $ Required 6: What is the Net…
Please help me find the accumulated depreciation . I got 150 but it's wrong apparently.
On July 1, 2014, Sunland Enterprises sold equipment with an original cost of $80,700 for $31,300. The equipment was purchased January 1, 2011, and was depreciated using the straight-line method over a five-year useful life with a $8,600 salvage value. Prepare the journal entry to record the sale of the equipment. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit III
In 2018, internal auditors discovered that PKE Displays, Inc., had debited an expense account for the $350,000 cost of a machine purchased on January 1, 2015. The machine's useful life was expected to be five years with no residual value. Straight-line depreciation is used by PKE. Ignoring income taxes, prepare the journal entry PKE will use to correct the error. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Event 1 1 Equipment Accumulated depreciation Retained earnings Answer is not complete. General Journal Debit Credit 350,000
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
A fire at the factory on 1 October 2018 damaged the machine leaving it with a lower operatingcapacity. The accountant considers that Phoenix Ltd (Phoenix) will need to recognise animpairment loss in relation to this damage. The accountant has ascertained the followinginformation at 1 October 2018:- Phoenix adopts cost model to account for the machine.- The carrying amount of the machine is $60,750.- An equivalent new machine would cost $90,000.- The machine could be sold in its current condition for a gross amount of $45,000.Dismantling costs would amount to $2,000.- In its current condition, the machine could operate for three more years which gives it avalue in use figure of $38,685.1) In accordance with HKAS 36 ‘Impairment of Assets’, which of the following woulddefinitely NOT be an indicator of the potential impairment of an asset (or group ofassets)?A An unexpected fall in the market value of one or more assetsB Adverse changes in the economic performance of one or more assetsC A…
Your company purchases a patent for $46,000 to attempt to compete in a usually restricted market. This patent does not have a salvage value at the end of its 5-year useful life. You are tasked with computing the depreciation schedule and book value for the patent using double declining balance with a switch to SL method (if necessary). Question 1 Part B: Complete the following table to show the depreciation schedule. If it is necessary to switch from DDB to SL depreciation, when the switch occurs, only enter the value of the SL depreciation and enter 0 for the DDB depreciation (eg. when/if the switch occurs, DDB: 0 and SL: X). Enter your answers in the form 1234 (enter 0 for blank table cells). NO DECIMALS Year B-1 (enter either the number with DDB (enter either the number no decimals, or 0 if blank) with no decimals, or 0 if blank) SL (enter either the number with no decimals, or O if blank) DDB or SL? (enter DDB, SL, or 0 if neither applies below! D., (enter either the number with B,…
(Error and Change in Estimate—Depreciation) Joy Cunningham Co. purchased a machine on January 1, 2015, for $550,000. At that time, it was estimated that the machine would have a 10-year life and no salvage value. On December 31, 2018, the firm’s accountant found that the entry for depreciation expense had been omitted in 2016. In addition, management has informed the accountant that the company plans to switch to straight-line depreciation, starting with the year 2018. At present, the company uses the sum-of-the-years’-digits method for depreciating equipment.InstructionsPrepare the general journal entries that should be made at December 31, 2018, to record these events. (Ignore tax effects.)
I'm doing this practice problem and I think I am doing it wrong? Could you please check my work?