Scenery Company experienced the following transactions during the year: 1. Purchased machinery for P500,000 cash. 2. Purchased land and building for P5,500,000 cash, including an appraiser’s fee of P100,000.
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Scenery Company experienced the following transactions during the year:
1. Purchased machinery for P500,000 cash. 2. Purchased land and building for P5,500,000 cash, including an appraiser’s fee of P100,000. An appraisal indicated fair value as follows: Land 2,000,000 Building 3,000,000 3. Invested in 5,000 shares of another entity at P100 per share. Subsequently, the entity exchanged the 5,000 shares for a delivery equipment. At the time of the exchange, the shares is quoted at 120 and the equipment has a list price of P680,000. Motor vehicle registration was paid in the amount of P3,000. 4. A certain equipment was donated by a shareholder to the entity. An independent appraisal of the equipment placed the fair value at P1,000,000 and the residual value at P100,000. Attorney’s fees and other legal expenses amounted to P25,000. 5. Land and building were acquired by issuing 60,000 shares of P100 par value. The share is quoted at P150 on the date of exchange, and the assets acquired had the following assessed value for tax purposes: Land 1,000,000 Building 3,000,000
Required : 1. Prepare
2. Determine the amount that will be used as the initial measurement (capitalized amount) of the PPE in each of the given transactions.
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