Required:Prepare the relevant journal entries for the year 2021 and 2022 At Dec. 31, 2021, information about the assets follows:Exercisessame class of plant and equipment.follows:Expected useful life5 yearsMachine AMachine BCostP100,00060,0003 уearsearnings in respect of realized revaluation surplus.Machine AMachine BFair valueP84,00038,000Expected usefullife4 years2 yearsOn July 1, 2022, machine B was sold for P32,000 cash. On the sameday, Lanier Corporation acquired machine C for P80,000 cash.Machine C has expected useful life of four years.At Dec. 31, 2022, information on the machines follows:Machine AMachine CFair valueP61,00068,500Expected useful life3 years1.5 yearsRequired:Prepare the relevant journal entries for the year 2021 and 2022.

Lanier Corporation has acquired Plant and Machinery and is following revaluation model of…

Answered: Required: Prepare the relevant journal…

Business

Accounting

Required: Prepare the relevant journal entries for the year 2021 and 2022

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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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

Required:

Prepare the relevant journal entries for the year 2021 and 2022

At Dec. 31, 2021, information about the assets follows:
Exercises
same class of plant and equipment.
follows:
Expected useful life
5 years
Machine A
Machine B
Cost
P100,000
60,000
3 уears
earnings in respect of realized revaluation surplus.
Machine A
Machine B
Fair value
P84,000
38,000
Expected usefullife
4 years
2 years
On July 1, 2022, machine B was sold for P32,000 cash. On the same
day, Lanier Corporation acquired machine C for P80,000 cash.
Machine C has expected useful life of four years.
At Dec. 31, 2022, information on the machines follows:
Machine A
Machine C
Fair value
P61,000
68,500
Expected useful life
3 years
1.5 years
Required:
Prepare the relevant journal entries for the year 2021 and 2022.

Definition Definition Method of recording financial transactions in the book of original entry by debiting and crediting the accounts affected by a transaction using the golden rules of accrual accounting.

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