Situation 3: A shareholder of WonWon Corporation gave the corporation a piece of land as aplant site. The fair value of this land is determined to be P500,000.Situation 4: YoYo Company paid cash for machinery, P900,000 subject to a 2% cash discount ifpaid within 15 days, and freight on machinery, P35,000. YoYo paid beyond the 15 day periodand therefore did not take the cash discount.Situation 5: LaLa Company acquired furniture and fixtures by issuing a P400,000 two yearnoninterest-bearing note. In similar transactions, the entity has paid 12% interest. Round offpresent value factors to three decimal places (e.g., 6.667)Questions:a. For Afable Company, how much was the initial cost of Land, Building, and Machinery?b. For WonWon Corporation, provide the journal entry to record the receipt of the land from the shareholderc. How much would YoYo Company record as the cost of the machinery?d. How much would LaLa Company record as the cost of the furniture and fixtures? Situation 1: Minmin Company made the following individual cash purchases:Land and buildingMachinery and office equipmentDelivery equipmentAn appraisal disclosed the following fair values:LandBuildingMachineryOffice equipmentDelivery equipmentP 6,000,0001,800,000500,000LandBuildingMachineryP 1,000,0003,000,000800,000400,000350,000Situation 2: Afable Company acquired the assets of another entity with the following fair value:P 1,000,0005,000,0002,000,000The entity issued 60,000 shares with P100 par value in exchange. The share had aquoted price of P150 on the date of purchase of the property.

The questions are asked to compute the value of assets. Property, plant, and, equipment:…

Situation 3: A shareholder of WonWon Corporation gave the corporation a piece of land as a plant site. The fair value of this land is determined to be P500,000. Situation 4: YoYo Company paid cash for machinery, P900,000 subject to a 2% cash discount if paid within 15 days, and freight on machinery, P35,000. YoYo paid beyond the 15 day period and therefore did not take the cash discount. Situation 5: LaLa Company acquired furniture and fixtures by issuing a P400,000 two year noninterest-bearing note. In similar transactions, the entity has paid 12% interest. Round off present value factors to three decimal places (e.g., 6.667) Questions: a. For Afable Company, how much was the initial cost of Land, Building, and Machinery? b. For WonWon Corporation, provide the journal entry to record the receipt of the land from the shar c. How much would YoYo Company record as the cost of the machinery? d. How much would LaLa Company record as the cost of the furniture and fixtures?

Situation 3: A shareholder of WonWon Corporation gave the corporation a piece of land as a plant site. The fair value of this land is determined to be P500,000. Situation 4: YoYo Company paid cash for machinery, P900,000 subject to a 2% cash discount if paid within 15 days, and freight on machinery, P35,000. YoYo paid beyond the 15 day period and therefore did not take the cash discount. Situation 5: LaLa Company acquired furniture and fixtures by issuing a P400,000 two year noninterest-bearing note. In similar transactions, the entity has paid 12% interest. Round off present value factors to three decimal places (e.g., 6.667) Questions: a. For Afable Company, how much was the initial cost of Land, Building, and Machinery? b. For WonWon Corporation, provide the journal entry to record the receipt of the land from the shar c. How much would YoYo Company record as the cost of the machinery? d. How much would LaLa Company record as the cost of the furniture and fixtures?

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

Contingent Liabilities and Provisions

A contingent liability can be defined as a liability the occurrence of which is dependent upon the happening of an uncertain future event. It is generally recorded in the books only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly.

Question

Situation 3: A shareholder of WonWon Corporation gave the corporation a piece of land as a
plant site. The fair value of this land is determined to be P500,000.
Situation 4: YoYo Company paid cash for machinery, P900,000 subject to a 2% cash discount if
paid within 15 days, and freight on machinery, P35,000. YoYo paid beyond the 15 day period
and therefore did not take the cash discount.
Situation 5: LaLa Company acquired furniture and fixtures by issuing a P400,000 two year
noninterest-bearing note. In similar transactions, the entity has paid 12% interest. Round off
present value factors to three decimal places (e.g., 6.667)
Questions:
a. For Afable Company, how much was the initial cost of Land, Building, and Machinery?
b. For WonWon Corporation, provide the journal entry to record the receipt of the land from the shareholder
c. How much would YoYo Company record as the cost of the machinery?
d. How much would LaLa Company record as the cost of the furniture and fixtures?

Situation 1: Minmin Company made the following individual cash purchases:
Land and building
Machinery and office equipment
Delivery equipment
An appraisal disclosed the following fair values:
Land
Building
Machinery
Office equipment
Delivery equipment
P 6,000,000
1,800,000
500,000
Land
Building
Machinery
P 1,000,000
3,000,000
800,000
400,000
350,000
Situation 2: Afable Company acquired the assets of another entity with the following fair value:
P 1,000,000
5,000,000
2,000,000
The entity issued 60,000 shares with P100 par value in exchange. The share had a
quoted price of P150 on the date of purchase of the property.

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Information Processing, Inc. (IPI) exchanges its used machine for a new machine with Jerrod Business Solutions Inc. The exchange has commercial substance. IPI’s used machine has a book value of $8,000 (original cost $12,000 less $4,000 accumulated depreciation) and a fair value of $6,000. The new machine has a fair value of $16,000. IPI also pays Jerrod Business Solutions $7,000 cash in the transaction. Accounting Issue(s): What is the correct amount that IPI should record for the machine it acquired in the exchange with Jerrod Business Solutions? Question 1: What is the correct amount that IPI should record for the machine it acquired in the exchange with Jerrod Business Solutions? $6,000 $7,000 $8,000 $13,000 $15,000 $16,000
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B3.
Yokoyama Company owns a machine with a cost of $92,000 and accumulated depreciation of $18,500 that can be sold for $66,000 less a 5% sales commission. Alternatively, Yokoyama Company can lease the machine to another company for 3 years for a total of $74,000, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Yokoyama Company on the machine would total $10,500 over the 3 years. Prepare a differential analysis on February 21 as to whether Yokoyama Company should lease (Alternative 1) or sell (Alternative 2) the machine. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Lease Machine (Alt. 1) or Sell Machine (Alt. 2) February 21 Differential Effect Lease Sell Machine Machine (Alternative 2) (Alternative 1) (Alternative 2) Revenues Costs Profit (loss) Should Yokoyama Company lease (Alternative 1) or sell (Alternative 2) the machine?