EXERCISE I 6Red Inc. has experienced several poor earnings and has several assets on its books that are undervalued. It desires torevalue its assets and eliminate the deficit. At December 31,2020, the company owns the following identifiable assets:CostAccumulatedBook valueFair valueDepreciationInventoryP IMP IMP 0.7MLand5 M5 M6.5 MBuildings7.5 MР 3.5 М4.0 M5.0 M1.5 MMachinery &Equipment3.5 М2 M2.2 MThe statement of financial position on December 31,2020, reported a deficit of P 2,000,000.REQUIRED:Journal entries to record the quasi-reorganization.

Lets start with basic understanding regarding quasi reorganization. Quasi reorganization means a…

Answered: Red Inc. has experienced several poor…

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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Wildhorse, Inc. is a calendar-year corporation whose financial statements for 2020 and 2021 included errors as follows: Year Ending Inventory Depreciation Expense 2020 $414000 overstated $360000 overstated 2021 137000 understated 103500 understated Assume that purchases were recorded correctly and that no correcting entries were made at December 31, 2020, or at December 31, 2021. Ignoring income taxes, by how much should Wildhorse's retained earnings be retroactively adjusted at January 1, 2022? $87500 increase $33500 decrease $20500 increase $393500 increase
At the end of 2020, Bonita Company is conducting an impairment test and needs to develop a fair value estimate for machinery used in its manufacturing operations. Given the nature of Bonita's production process, the equipment is for special use. (No secondhand market values are available.) The equipment will be obsolete in 2 years, and Bonita's accountants have developed the following cash flow information for the equipment. Year 2021 2022 2022 Net Cash Flow Estimate $5,440 9,500 $(460) 2,180 3,800 Scrap value $530 970 Probability Assessment 40% Click here to view factor tables 60% 20% 60% 20% 50% 50% Using expected cash flow and present value techniques, determine the fair value of the machinery at the end of 2020. Use a 6% discount rate. Assume all cash flows occur at the end of the year. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, e.g. 458,581.) Sair Fair value of the machinery at the end of 2020 $
24. When preparing a draft of its December 31, 2020 balance sheet. Era Joy reported net assets totaling P50,000,000. Included is the asset section of the balance sheet were: • Treasury stock of Era Joy Company at cost, which approximates market value on December 31, P5,000,000 • Property no longer adopted for use in business, P1,000,000 • Cash surrender value, P500,000 • Allowance for unrealized loss on noncurrent equity investments, P1,500,000 • Computer software, P4,000,000 At what amount, should the net assets be reported on December 31, 2020?
The land that Martin Company paid $81,000 to purchase in the prior year had an appraised market value of $112,000 at the end of the current reporting period. Which of the following shows how the change in market value will affect the company's accounting equation? The letters "NA" indicate that the component of the equation is not affected. A. B. C. D. Assets $ 81,000 $ 31,000 NA $ 112,000 =Liabilities + NA NA ΝΑ ΝΑ = = = = Common Stock NA NA NA ΝΑ Retained Earnings $ 81,000 $ 31,000 ΝΑ $ 112,000
On Pina's multiple - step income statement for 2023, income from continuing operations is: Select answer from the options below a) $17395. b) $24850. c)$40400. d) $17780.
Bananas, Inc. is a calendar-year corporation. Its financial statements for the years ended December 31, 2019 and 2020 contained the following errors: Ending Inventory Depreciation expense 2019 $25,000 overstatement 10,000 understatement 2020 $40,000 understatement 20,000 overstatement Assume that no correcting entries were made in 2019 or 2020 and that no errors existed in 2018. Ignoring income taxes, by how much will retained earnings at December 31, 2020 be overstated or understated? Enter an overstatement as a positive number and an understatement as a negative number.
On January 1, 2021, Bambi Ltd. purchased equipment for $728,000. The equipment was assumed to have an 8-year useful life and no residual value and was to be depreciated using the straight-line method. On January 1, 2023, Bambi's management became concernedthat the equipment may have become obsolete. Management calculated that the undiscounted future net cash flows from the equipment was $523,250, the discounted future net cash flows was $464,100, and the current fair value of the equipment less cost ofdisposal (of $1,800 ) was $455,000. c) Assuming that Bambi is a public Canadian company, identify which model should be used to test for impairment. d) Record the journal entry to record the impairment loss, if any. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry.) Account Titles and Explanation Debit…
Bayley Company has the following trial balance below at December 31, 2020. All accounts have normal balances. Account Balance Cash $460,000 Accounts receivable (net of the Allowance for Doubtful Accounts) 352,000 Inventory at the lower of FIFO cost and net realizable value 451,000 Trading Investments 230,000 Buildings (net of accumulated depreciation) 740,000 Equipment (net of accumulated depreciation) 240,000 Land held for Future Use 305,000 Goodwill 89,000 Notes Receivable (due 2025) 91,000 Prepaid Insurance 16,000 Accounts Payable 345,000 Guaranteed Investment Certificates 50,000 Notes Payable (due in 2021) 235,000 Bonds Payable at net carrying value (due February 1, 2021) 83,000 Rent Payable 55,000 Bonds Payable at net carrying value (due December 31, 2028) 746,000 Common shares, unlimited number of shares authorized 400,000 Contributed surplus 190,000 Retained…
In 2020, an accountant for SafeCo inadvertently deleted data related to the financial statements. The following information was able to be retrieved Account 12/31/2020 12/31/2019 Cash 200,000.00 250,000.00 Accounts Receivable Property Plant and Equipment 45,000.00 ? 200,000.00 90,000.00 300,000.00 Goodwill Accounts Payable Long Term Debt 235,000.00 200,000.00 200,000.00 300,000.00 Common Stock 30,000.00 Retained Earnings 200,000.00 20,000.00 1) All balances were normal. 2) No other accounts were presented. 3) Dividends were issued during the period for 30,000 4) After recording $30,000 in depreciation for the year, a $20,000 gain was noted when certain property was sold 5) The Goodwill was acquired through issuance of Common Stock Prepare a Statement of Cash Flows (using Indirect Method) for 2020.
The following accounts are extracted from the worksheet of X Company on December 31, 2020: Income frem eentinuing operations after taxes: $2,000,000 • During the year, the company suffered from abnonmal and infrequent hurricane damages that had resulted in a $60,000 pretax loss During the yeaI also, the company stopped the activities of its REW segment which had resulted in a pretax operating loss of S100,000 and a net of tax loss on di sposal $20,000 Tax Rate was 30%
The Board of Directors decides that old inventory costing €18,000 is to be written off as the inventory is no longer sellable (it has gone out of fashion). Identical inventory in the past was sold to customers for €31,000. What is the impact on the net assets of the company in monetary terms?

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