Ex 10: Section 4.3.1. Cost model & revaluation model- skill: basic •Active Asset Inc. owns a freely transferable taxi operator's license, which it acquired on January 1, 20X1, at an initial cost of $10,000. The useful life of the license is five years (based on the date it is valid for). The entity uses the straight-line method to amortize the intangible. Such licenses are frequently traded either between existing operators or with aspiring operators. At the balance sheet date, on December 31, 20X2, due to a government-permitted increase in fixed taxi fares, the traded values of such a license was $12,000. The accumulated amortization on December 31, 20X2, amounted to $4,000. •Required Pass Journals
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- 14 Majestic LLC purchased a factory for lump-sum of RO800,000 paid via bank. The fair value of each of component of the purchase is given below: Asset Fair Market value Land 85000 Building 155000 Equipment 460000 Calculate the amount at which each of the above components shall be recognized on purchase date and write the journal entry for recording purchase transaction. a. Dr Land Ac OMR 85000 Dr Building A/C 155000 Dr Equipment A/C 460000and Cr Cash A/C OMR 700000 b. Dr Land Ac OMR 97120 Dr Building A/C 177120 Dr Equipment A/C 525760 and Cr Cash A/C OMR 800000 c. None of the given options d. Dr Cash A/C OMR 800000 and Cr land A/c 97120 Cr Building A/C 177120 Equipment A/C 460000MCQ3 Smitty Inc. wishes to use the revaluation model for this property: Before Revaluation • Building Gross Value 120,000 • Building Accumulated Depreciation 40,000 • Net carrying value 80,000 The fair value for the property is $150,000. Assuming this is the first year of using the revaluation model, what amount would be booked to the Accumulated Depreciation account, if Smitty chooses to use the proportional method to record the revaluation?Dain's Diamond Bit Drilling purchased the following assets this year. Asset Drill bits (5-year) Drill bits (5-year) Commercial building Purchase Date Mar-03 Jul-17 May-26 Problem 10-59 Part d (Algo) Assume its taxable income for the year was $61,000 for purposes of computing the §179 expense (assume no bonus depreciation). (Use MACRS Table 1, Table 2, Table 3, Table 4, and Table 5.) Note: Leave no answer blank. Enter zero if applicable. Maximum §179 expense Original Basis $ 90,800 95,800 236,000 d. If the January drill bits' original basis was $4,283,000, what is the maximum amount of §179 expense Dain's may deduct for the year? $ 3,426,400 x
- AA insert Construction Bhd just purchased some fixed assets that are classified as 5-year property for their asset. The proposed assets cost RM14,200, its installation costs RM700 and its shipping cost RM 320. What is the amount of the depreciation expense using the straight-line method (SLM)?Problem 2 Fixed Asset Theory. Assume that at 1/1/x1 P company sells a piece of equipment to S for $900,000. At the time of the sale, the asset was recorded on P's books as follows: Original Cost -AD NBV $600,000 -$200,000 $400,000 The asset has a 3 year remaining life. 1) How much would be the excess depreciation? 2) What would be the correct depreciation expense for 19x1 3) What would be the correct consolidated asset cost at 12/31/x1 4) What would be the corrected accumulated depreciation at 12/31/x2 Please provide the two consolidation journal entries at 12/31/x2:Problem 6. Sales and Leaseback On Januar y 1 20х1, Entity sold building to Entity and a simultaneously leased it back. Additional information follows : Fair value of building 1,000,000 Carrying amount of building 800,000 Remaining useful life of building 10 years Lease Term 5 years Annual rent payable at the end of each year 100,000 Implicit interest rate equal to market rate 12% The transfer qualifies as a sale. Requirements (Independent cases) : а. If the sales price is P1,000,000 which is equal to fair value compute t he following under the seller-lessee accounting i. Lease liability ii. Right of use Asset iii. Gain or Loss iv. Journal entries on January 1, 20x1 b. If the sales price is P1,000,000 which is equal to fair value compute the following under the buyer-lessor acco unting i. Gross Investment ii. Net Investment iii. Unearned Interest Income iv. Journal entries on January 1, 20x1 c. Same requirements in a and b but the sales price is P1,100,000 which is above the fair value…
- Exercise 8-26 (Algorithmic) (LO. 7) On October 1, 2022, Verónica purchased a business. Of the purchase price, $190,000 is allocated to a patent and $1,140,000 to goodwill. If required, round your intermediate values to nearest dollar and use in subsequent computations. Calculate Verónica's 2022 § 197 amortization deduction.28 Assume that Abdul Baari LLC acquiring a new truck for OMR 45000. In exchange, the company pays OMR 32000 cash and old truck. The old truck originally cost OMR 40000 and has accumulated depreciation of OMR 25,000, which implies a OMR 15,000 book value at the time of exchange. From the following given options identify the correct journal entry for profit or loss on exchange of old truck with new truck. a. Dr New Truck A/c OMR 45000 Dr Loss on exchange of truck OMR 2000 Dr Accumulated depreciation on old Truck OMR 25000 and Cr cash A/c 32000 Cr Old Truck A/C OMR 40000 b. Dr New Truck A/C OMR 47000 and Cr Cash A/c 32000 Cr Old truck A/c 15000 c. Dr New Truck A/C OMR 45000 Dr Loss on exchange of old Truck OMR 2000 and cash A/c 32000 Cr old Truck A/c OMR 15000 d. None of the given options Clear my choice28 Assume that Abdul Baari LLC acquiring a new truck for OMR 45000. In exchange, the company pays OMR 32000 cash and old truck. The old truck originally cost OMR 40000 and has accumulated depreciation of OMR 25,000, which implies a OMR 15,000 book value at the time of exchange. From the following given options identify the correct journal entry for profit or loss on exchange of old truck with new truck. a. Dr New Truck A/c OMR 45000 Dr Loss on exchange of truck OMR 2000 Dr Accumulated depreciation on old Truck OMR 25000 and Cr cash A/c 32000 Cr Old Truck A/C OMR 40000 b. Dr New Truck A/C OMR 47000 and Cr Cash A/c 32000 Cr Old truck A/c 15000 c. Dr New Truck A/C OMR 45000 Dr Loss on exchange of old Truck OMR 2000 and cash A/c 32000 Cr old Truck A/c OMR 15000 d. None of the given options
- MAP Ltd acquired a Machine from FAT Ltd for the following consideration:o Cash $65 000,o Land in the books of MAP Ltd the land is recorded at its cost of $750 000.It has a fair value of $700 000.MAP Ltd also agrees to assume the liability of the FAT Ltd bank loan of $95 000 as part ofthe Machine acquistion Calculate the acquisition cost of the Machine Provide the journal entries that would appear in MAP Ltd.’s books to accountfor the acquisition of the Machine.Mc Graw ill Check my work mode! This shows what is correct or incorrect for the work you have completed so far. It does not indicate completi Exercise 15-41 (Algo) Sale-leaseback [LO Appendix 15] To raise operating funds, Signal Aviation sold an airplane on January 1, 2024, to a finance company for $950,000. Signal immediately leased the plane back for a 12-year period, at which time ownership of the airplane will transfer to Signal. . The airplane has a fair value of $980,000. . Its cost and its book value were $690,000. . Its useful life is estimated to be 14 years. . The lease requires Signal to make payments of $126,750 to the finance company each January 1. Signal depreciates assets on a straight-line basis. . The lease has an implicit rate of 10%. Required: 1. & 2. Prepare the appropriate entries for Signal on January 1, 2024 and December 31, 2024, to record the transaction and necessary adjustments. Note: Round your intermediate and final answers to the nearest whole dollar…- Entity A acquires equipment on January 1, 20x1. Information on costs is as follows: Purchase price, gross of Php 10,000 trade discount Non-refundable purchase taxes Delivery and handling costs Installation costs 800,000 20,000 40,000 30,000 Present value of decommissioning and restoration Costs 10,000 How much is the initial cost of the equipment? a. 900,000 b. 820,000 c. 870,000 d. 890,000