Which of the statements are true?
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An entity has agreed in a directors’ meeting to sell a building and has tentatively started looking for a buyer for the building. The price of the building has been fixed at P6 and a surveyor has valued the building based on market prices at P5.6M. The entity will continue to use the building until another building has been found with equivalent facilities, and in a suitable location for the office staff, who will not be relocated until the new building has been found. Additionally, the entity is planning to sell part of its business and has actively marketed the business at a fair price but, before the business can be sold, government approval is required, and any sale requires government approval. This means that the sale time is difficult to determine and it may take longer than one year to sell the disposal group. Which of the statements are true?
A.The building and the disposal group which is a part of their business can be classified as held-for-sale.
B. The building and the disposal group which is a part of their business can be classified as abandoned.
C. The building will not be treated as held-for-sale while the disposal group which is a part of their business can be classified as held-for-sale.
D. The building will be treated as held-for-sale while the disposal group which is a part of their business cannot be classified as held-for-sale.
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- An entity has agreed in a directors’ meeting to sell a building and has tentatively started looking for a buyer for the building. The price of the building has been fixed at P6 and a surveyor has valued the building based on market prices at P5.6M. The entity will continue to use the building until another building has been found with equivalent facilities, and in a suitable location for the office staff, who will not be relocated until the new building has been found. Additionally, the entity is planning to sell part of its business and has actively marketed the business at a fair price but, before the business can be sold, government approval is required, and any sale requires government approval. This means that the sale time is difficult to determine and it may take longer than one year to sell the disposal group. Which of the statements are true?Finley Co. is looking for a new office location and sees a building with a fair value of $400,000. Finley also notices that much of the equipment in the existing building would be useful to its own operations. Finley estimates the fair value of the equipment to be $80,000. Finley offers to buy both the building and the equipment for $450,000, and the offer is accepted. Determine the amounts Finley should record in the separate accounts for building and equipment.Sam Ltd owns a piece of vacant land in Broadmeadows. A substantial number of factory owners establish their manufacturing plant in this location due to its accessibility and high affordability. The management of Sam Ltd wants to adopt fair value model to measure the land on 30 June 2021. Which of the following information is most useful in assisting management in estimating the fair value of the land? Group of answer choices Sam Ltd intends to lease out the land in the next financial year, and they believe they could receive an annual lease payment of $50,000. A factory owner purchased a piece of vacant land near Broadmeadows for $1m to build a new factory plant on 21 May 2021. The cost to build a new factory on a piece land in Broadmeadows is about $200,000. A landowner sold a piece of vacant land in Southbank to a property developer for $1.05m on 21 May 2021.
- Finley Company is looking for a new office location and sees a building with a fair value of $740,000. Finley also notices that much of the equipment in the existing building would be useful to its own operations. Finley estimates the fair value of the equipment to be $114,000. Finley offers to buy both the building and the equipment for $790,000, and the offer is accepted. Determine the amounts Finley should record in the separate accounts for building and equipment. (Do not round intermediate calculations.)GGG Company ventured into construction of a condominium in Baguio which is rated as the largest state-of-the-art structure. The board of directors decided that instead of selling the condominium, the entity would hold this property for purposes of earning rentals by letting out space to business executives in the area. The construction of the condominium was completed and the property was placed in service on January 1, 2019. The cost of the construction was P50,000,000. The useful life of the condominium is 25 years and the residual value is P5,000,000. An independent valuation expert provided the following hair value at each subsequent year-end: December 31, 2019 = 55,000,000; December 31, 2020 = 53,000,000; December 31, 2021 = 60,000,000. Under the cost model, what amount should be reported as depreciation on investment property for 2019?GGG Company ventured into construction of a condominium in Baguio which is rated as the largest state-of-the-art structure. The board of directors decided that instead of selling the condominium, the entity would hold this property for purposes of earning rentals by letting out space to business executives in the area. The construction of the condominium was completed and the property was placed in service on January 1, 2019. The cost of the construction was P50,000,000. The useful life of the condominium is 25 years and the residual value is P5,000,000. An independent valuation expert provided the following hair value at each subsequent year-end: December 31, 2019 = 55,000,000; December 31, 2020 = 53,000,000; December 31, 2021 = 60,000,000. Under fair value model, what amount should be recognized as gain from change in fair value in 2019?
- CHOOSE THE LETTER OF ANSWER Galore Company ventured into construction of a condominium in Makati which is rated as the largest state-of-the art structure. The board of directors decided that instead of selling the condominium, the entity would hold this property for purposes of earning rentals by leasing out space to business executives in the area. The construction of the condominium was completed and the property was placed in service on January 1, 2020. The cost of the condominium was P50,000,000. The useful life of the condominium is 25 years and the residual value is P5,000,000. An independent valuation expert provided the following fair value at each subsequent year-end:December 31, 2020 55,000,000December 31, 2021 53,000,000December 31, 2022 60,000,000 Under the cost model, what amount should be reported as annual depreciation of investment property? a. 1,800,000b. 2,000,000c. 2,200,000d. 0 under the fair Value model, what amount should be recognized as gain from change in fair…APA is planning to expand its operations and plans to purchase a parcel of land on which to construct a building for their review center, which they will need 5 years hence. The current costs are: land: P2M; building: P3.5M. Since these are not needed immediately, the company plans to defer the purchase of the land and the construction of the building until they are needed. If the value of the land and the cost of the building are expected to appreciate at the rates of 10% and 8% per annum, respectively. What will be the total cost of the investment after 5 years? A. P8,580,275.74 B. P7,244,668.37 C. P8,363,668.27 D. None of these1. During the year, Agency XYZ entered into a contract with a third party for the construction of a new building. The contract price was P14,500,000.00. The new building was not finished on the agreed deadline due to lack of equipment needed for the construction. The contractor was charged for liquidation damages worth P500,000. The agency director also wanted its old building to be connected to the new building for the convenience of its employees and also of the public. Letters were sent out to interested third parties for this project and a date was set up for the bidding. Estimated cost of the project is P5 million. How much is the cost of the building?
- Manny Carson, certified management accountant and controller of Wakeman Enterprises, has been given permission to acquire a new computer and software for the company’s accounting system. The capital investment analysis showed an NPV of $100,000. However, the initial estimates of acquisition and installation costs were made on the basis of tentative costs without any formal bids. Manny now has two formal bids, one that would allow the firm to meet or beat the original projected NPV and one that would reduce the projected NPV by $50,000. The second bid involves a system that would increase both the initial cost and the operating cost. Normally, Manny would take the first bid without hesitation. However, Todd Downing, the owner of the firm presenting the second bid, is a close friend. Manny called Todd and explained the situation, offering Todd an opportunity to alter his bid and win the job. Todd thanked Manny and then made a counteroffer. Todd: Listen, Manny, this job at the original…Electrolux Group. has decided to close its oil and gas operations in Aberdeen on 1 March 2020 but retain the warehouse from which the operations were carried out as an investment property. The warehouse had a net book value at 30 September 2019 of £6.8m and a fair value of £7.2m at 1 March 2020. At the company's year end of 30 September 2020, the fair value of the warehouse was £8.0m. Assuming Electrolux group policy is to value investment property at fair value, the amount that the company would include in in the income statement for the year ended 30 September 2020 would be: O a. Debit £0.5m O b. Debit £0.4m O c. Credit £1.2m O d. Credit £0.8mDune Ltd is considering a project that will require the use of a crane that cost £600,000 when it was acquired four years ago and which has a current carrying amount (statement of financial position value) of £370,000. If the project is not undertaken, the crane could be sold for £180,000 or it could be used for another project. If it is used for the other project, the business will not have to purchase another crane for £250,000. The business uses the net present value (NPV) method to appraise investment projects. What is the relevant cost of the machine when calculating the NPV of the project? O a. £180,000 O b. £370,000 O c. £780,000 O d. £250,000 e. £600,000