Sheridan Corporation owns and manages a small 10-store shopping centre, which it classifies as an investment property. Sheridan hasa May 31 year end and initially recognized the property at its acquisition cost of $11.2 million on June 2, 2022. The acquisition costconsisted of the purchase price of $105 million, costs to survey and transfer the property of $460,000, and legal fees to acquire theproperty of $240,000. Sheridan determines that approximately 26% of the shopping centre's value is attributable to the land, with theremainder attributable to the building. The following fair values are determined:DateMay 31, 2023May 31, 2024Fair Value$10,700,000$10,594,000May 31, 2025 $11,208,000Sheridan expects the shopping centre building to have a 35-year useful life and a residual value of $1.428 million. Sheridan uses thestraight-line method for depreciation.

Sheridan Corporation's management of its small 10-store shopping center as an investment property…

Answered: Sheridan Corporation owns and manages a…

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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On April 13, 2023, Swifty Ltd. purchased a small apartment building with eight suites. The building qualified as an investment property under IAS 40. At the time of purchase, six out of the eight suites were rented. Swifty paid the following items at the time of its acquisition of the apartment building (all items were paid in cash except for the building itself, for which Swifty took out a mortgage): Purchase price of building $4,050,000 Legal fees 7,720 Property transfer fees 24,500 Painting of empty apartments 5,390 Advertising for empty apartments 2,000 On April 14 the previous owner of the apartment building paid Swifty $13,000 for damage deposits from the existing tenants. On December 31, 2023, the apartment building had a fair value of $4,250,000. On December 31, 2024, it was determined that the apartment building had a fair value of $4,040,000. Assuming Swifty follows IFRS, prepare the journal entries required to record the above events. (Credit account titles are automatically…
Samtech Manufacturing purchased land and building for $3 million. In addition to the purchase price, Samtech made the following expenditures in connection with the purchase of the land and building: Title insurance Legal fees for drawing the contract Pro-rated property taxes for the period after acquisition State transfer fees $ 29,000 6,500 49,000 5,300 An Independent appraisal estimated the fair values of the land and building, if purchased separately, at $3 and $2 million, respectively. Shortly after acquisition, Samtech spent $95,000 to construct a parking lot and $53,000 for landscaping. Required: 1. Determine the initial valuation of each asset Samtech acquired in these transactions. 2. Determine the initial valuation of each asset, assuming that immediately after acquisition, Samtech demolished the building. Demolition costs were $380,000 and the salvaged materials were sold for $7,500. In addition, Samtech spent $92,000 clearing and grading the land in preparation for the…
Advanced Automotive pays $270,000 for a group purchase of land, building, and equipment. At the time of acquisition, the land has a current market value of $30,000, the building's current market value is $210,000, and the equipment's current market value is $60,000. Prepare a schedule allocating the purchase price of $270,000 to each of the individual assets purchased based on their relative market values, then journalize the lump-sum purchase of the three assets. The business signs a note payable for the purchase price. Prepare a schedule allocating the purchase price of $270,000 to each of the individual assets purchased based on their relative market values, then journalize the lump-sum purchase of the three assets. The business signs a note payable for the purchase price. Begin by preparing a schedule allocating the purchase price of $270,000. (Do not enter the % sign within the input fields of the Percentage of Total Market column.) Asset Land Building Equipment Total Market…
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Millbourne corporation has acquired a property that includes both land and a building for $550,000. The corporation hired an appraiser who has determined that the market value of the land is $350,000 and that of the building is $480,000, at what amount should the corporation record the cost of land? A) $147,000 B) $363,000 C) $231,000 D) $275,000
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Samtech Manufacturing purchased land and a building for $4 million. In addition to the purchase price, Samtech made the following expenditures in connection with the purchase of the land and building: Title insurance Legal fees for drawing the contract Pro-rated property taxes for the period after acquisition State transfer fees An independent appraisal estimated the fair values of the land and building, if purchased separately, at $3.2 and $1.8 million, respectively. Shortly after acquisition, Samtech spent $92,000 to construct a parking lot and $50,000 for landscaping. Required: 1. Determine the initial valuation of each asset Samtech acquired in these transactions. 2. Determine the initial valuation of each asset, assuming that immediately after acquisition, Samtech demolished the building. Demolition costs were $350,000 and the salvaged materials were sold for $6,000. In addition, Samtech spent $89,000 clearing and grading the land in preparation for the construction of a new…
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Drexler acquire an item of plant on 1 October 2021 at a cost of $500,000. It has a useful life of five years (straight-line depreciation) and an estimated residual value of 10% of its historical cost or current cost as appropriate. As at 30 September 2023 the manufacturer of the plant still makes the same item of plant, and its current price is $600,000. What is the correct carrying amount to be shown in the statement of financial position of Drexler as at 30 September 2023 under historical and current cost?

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