Winnie Corporation purchases Joshua Company and, as part of the contract, will have to pay Joshua an additional $100,000 if the company achieves certain revenue goals for two years after the acquisition. How should Winnie account for this contingent payment?
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- On January 1, 2020, Tom Co (A seller-lessee) sells a building to MacCo (an unrelated buyerlessor) for cash of $2,000,000. The fair value of the building at that time is $1,800,000; the carrying amount immediately before the transaction is $1,000,000. At the same time, TomCo enters into a contract with MacCo for the right to use the building for 19 years, with annual payments of $120,000 payable at the end of each year. The interest rate implicit in the lease is 4.5%, which results in a present value of the annual payments of $1,459,200. The transfer of the asset to MacCo has been assessed as meeting the definition of a sale under PSAK 72. Discuss the implication of the transactions and state the journal entries on January 1, 2020Turner Company signs a lease agreement on January 1, 2024, to lease equipment to Holmgren Company. The term of the non-cancelable lease is 5 years, and annual payments are required at the beginning of each year. The following information relates to this agreement. -Holmgren has the option to purchase the equipment for $11,000 upon termination of the lease. It is reasonably certain that Holmgren will exercise this option (i.e. it is a bargain purchase). - The equipment has a cost of $118,000 and fair value of $186,000 to Turner. Its useful economic life is 10 years. What annual rental amount will Williamson charge if it desires to earn a return of 7% on its investment?Juliet Mindanao Technologies licenses its intellectual property to Francis Bautista industries. Terms of the arrangement require Francis Bautista to pay Juliet Mindanao P500,000 an April 1, 20x4 when Francis Bautista first obtains access to Juliet Mindanao's intellectual property, and then to pay Julet Mindanao a royalty of 4% of future sales of products that utilize that intellectual property, Juliet Mindanao anticipates receiving sales-based royalties of P1,000,000 during 20x4 and P1.500.000/year for the years 20x5-20x9. Assume Juliet Mindanao accounts for the Francis Bautista license as a right of use, because Juliet Mindanao's actions subsequent to April 1, 20x4 will affect the benefits that Francis Bautista receives from access to Jullet Mindanao's intellectual property. NOTE: Please answer LETTER D ONLY b. What journal entry would Juliet Mindanao record on April 1. 20x4, when it receives the P500.000 payment from Francis Bautista? c. Assume on December 31, 20x4, Juliet Mindanao…
- Tran Technologies licenses its functional intellectual property to Lyon Industries. Terms of the arrangement require Lyon to pay Tran $590,000 on April 1, 2024, when Lyon first obtains access to Tran’s intellectual property, and then in the future to pay Tran a royalty of 5% of future sales of products that utilize that intellectual property. Tran anticipates receiving sales-based royalties of $1,090,000 during 2024 and $1,590,000 per year for the years 2025 to 2029. Assume Tran accounts for the Lyon license as a right of use, because Tran’s actions subsequent to April 1, 2024, will not affect the benefits that Lyon receives from access to Tran’s intellectual property. Required: Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org) and select Basic View for free access. Identify the specific nine-digit Codification citation (XXX-XX-XX-XX) for accounting for variable consideration arising from sales-based royalties on licenses of intellectual property,…15. Ricky Company is a dealer in property. On January 1, 2020, the entity entered into a finance lease with Peter Inc. under which it would pay P200,000 every January 1 commencing in 2020. The lease contract contains 5 years of lessor-lessee relationship. The cost of the car is P600,000 and its fair value is P750,000. To secure a formal turnover of rights, Ricky paid legal fees of P20,000 to an attorney in arranging the lease with the courts. What amount of gross profit on sale should be recognized for the year ended December 31, 2020? a. P150,000 b. P130,000 c. P20,000 d. P0GHI Corporation entered into a 20 year franchise that allows ZZ Corporation the right to use its intellectual property. As part of the standard contract, ZZ gave P500,000 as down payment and a P2,000,000 note that requires equal annual payments over ten years. The down payment is for the supporting assets (equipment and inventory) with total dost of P300,000 and stand-along price of P500,000 to GHI. The prevailing market interest rate of similar notes is 9%. GHI is also to receive royalty of 3% of ZZ's revenue each year end. ZZ earned revenues of P10,000,000 during the first year. What is the Interest revenue for the first year?
- How much should be shown in FIVE's 2021 income statement as gross rental income? * On December 31, 2021, FIVE Corporation signed an operating lease for a warehouse with Aye Company for ten years at P30,000 per year. Upon execution of the lease, Aye paid FIVE P60,000, covering rent for the first two years. FIVE closed its books on December 31 and correctly reported P60,000 as gross rental income in its 2021 income tax return.Manatee Corporation purchased a special conveyor system on December 31, 2025. The purchase agreement stipulated that Manatee should pay $50,000 at the time of purchase and $15,000 at the end of each of the next 5 years. The conveyor system should be recorded on December 31, 2025, at what amount, assuming an appropriate interest rate of 8%?Bridgeport Inc. enters into an agreement on March 1, 2020, to sell Werner Metal Company aluminum ingots. As part of the agreement, Bridgeport also agrees to repurchase the ingots on May 1, 2020, at the original sales price of $190,000 plus 3%. (a) Prepare Bridgeport's journal entry necessary on March 1, 2020. (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 ancienter O for the amounts.) Account Titles and Explanation eTextbook and Media List of Accounts Debit Credit
- The following problem requires present value information: Biotech sold a patent on a new blood analyzer to Pharma. The sales agreement which was signed on January 1, 2019 requires Pharma to pay Biotech $1 million immediately. In addition, Pharma is required to pay $700,000 each December 31 for 20 years starting with December 31, 2019. Pharma and Biotech judge that a 9 percent is an appropriate interest rate for this arrangement. (a) Compute the present value of the receivable on Biotech’s books on January 1, 2019 immediately after receiving the $1 million down payment. (b) Compute the present value of the receivable on Biotech’s books on December 31, 2019 Enter your answer(s) in the following format rounded off to the nearest dollar (c) Compute the present value of the receivable on Biotech’s books on December 31, 2020Blossom, Inc. leases a piece of equipment to Wildhorse Company on January 1, 2025. The contract stipulates a lease term of 5 years, with equal annual rental payments of $8,880 at the end of each year. Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature. The asset has a fair value of $48,000, a book value of $43,000, and a useful life of 8 years. At the end of the lease term, Blossom expects the residual value of the asset to be $12,000, and this amount is guaranteed by a third party. Assuming Blossom wants to earn a 5% return on the lease and collectibility of the lease payments is probable, record its journal entry at the commencement of the lease on January 1, 2025. (List all debit entries before credit entries. Credit account titles are automaticallyElton Electronics leases testing equipment to Startup Corporation. The equipment is not specialized and is delivered on January 1, 2023. The fair value of the equipment is $118,000. The cost of the equipment to Elton is $113,000 and the expected life of the testing equipment is 8 years. Elton incurs initial direct costs of $10,000, which they elect to expense. The lease term for the equipment is 8 years, with the first payment due upon delivery, and seven subsequent annual payments beginning on December 31, 2023 and ending on December 31, 2029. Elton's implicit rate is 5% and they expect that collection of the $14,500 lease payments is probable.What is the principal balance in the Net Investment in Lease — Sale Type account after the second payment on December 31, 2023? Group of answer choices $83,902 $98,402 $113,000 $73,597