Barney Company is an 80% owned subsidiary Hayes Inc. During 20X2, Hayes sold land to Barney for $60,000.Based upon an independent appraisal of the land's value. The land originally cost $40,000. On July 1, 20X2,Barney sold machinery to Hayes for $20,000. The machinery was carried on Barney's books at a $30,000 cost,with accumulated depreciation of $17,000. The machinery had a remaining life of 5 years at the sale date. Bothcompanies use the straight line method depreciation. Instructions: Complete the following partial worksheet for20X3, the year subsequent to the asset sales. Key and explain all eliminations and adjustments. Hayes Inc, andSubsidiary Barney Company Partial Worksheet For the Year Ended December 31, 20X8

Consolidation of financial statements is a critical process for companies with subsidiaries,…

Answered: Barney Company is an 80% owned…

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization

Section: Chapter Questions

Problem 44P

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Gupta Co purchased a building on 30 June 19X9 for $250,000. At the date of purchase, Gupta estimated the useful life of the building to be 35 years. On 30 June 20X4, the building was revalued to $340,000 and there was no change in its useful life. On 31 December 20X5, Gupta Co sold the property for $450,000. The company’s policy is to depreciate property on a straight line basis with a proportionate charge in the years of acquisition and disposal. What is the profit on disposal to be recognised in the statements at 30 June 20X6?
On September 12, Pina Company agreed to an exchange of assets with another company. Pina gave up a machine with an original cost of $50,800. $30,200 in accumulated depreciation had been recorded on this machine over the course of Pina's ownership. Pina determined that the machine being given up had a fair value of $18,000. Pina also paid $7,000 in cash. Assume that Pina follows IFRS and that the transaction has commercial substance. Prepare the journal entry to record the asset exchange on Pina's books. (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 and enter O for the amounts. List all debit entries before credit entries.) Date Account Titles and Explanation Sept. 12 Debit Credit
On September 12, Pina Company agreed to an exchange of assets with another company. Pina gave up a machine with an original cost of $50,800. $30,200 in accumulated depreciation had been recorded on this machine over the course of Pina's ownership. Pina determined that the machine being given up had a fair value of $18,000. Pina also paid $7,000 in cash. Assume that Pina follows IFRS and that the transaction has commercial substance. Prepare the journal entry to record the asset exchange on Pina's books. (Credit account titles are automatically indented when the amount
During the current year, Ramirez Developers disposed of plant assets in the following transactions:Feb. 10 Office equipment costing $26,000 was given to a scrap dealer at no charge. At the dateof disposal, accumulated depreciation on the office equipment amounted to $25,800.Apr. 1 Ramirez sold land and a building to Claypool Associates for $900,000, receiving$100,000 cash and a five-year, 9 percent note receivable for the remaining balance.Ramirez’s records showed the following amounts: Land, $50,000; Building, $550,000;Accumulated Depreciation: Building (at the date of disposal), $250,000.Aug. 15 Ramirez traded in an old truck for a new one. The old truck had cost $26,000, and itsaccumulated depreciation amounted to $18,000. The list price of the new truck was$39,000, but Ramirez received a $10,000 trade-in allowance for the old truck and paidonly $29,000 in cash. Ramirez includes trucks in its Vehicles account.Oct. 1 Ramirez traded in its old computer system as part of the purchase…
Garrett Corporation paid $200,000 to acquire land, buildings, and equipment. At the time of acquisition, Garrett paid $20,000 for an appraisal, which revealed the following values: land, $100,000; buildings, $125,000; and equipment, $25,000. Required: 2. Assume that Garrett uses IFRS and chooses to use the revaluation model to value its property, plant, and equipment. At the end of the year, the book value of the land, buildings, and equipment are $88,000, $105,000, and $19,000, respectively. The company determines that the fair value of the land, buildings, and equipment at the end of year is $113,000, $107,000, and $16,000, respectively. Prepare the journal entries that Garrett should make to value its property, plant, and equipment.
Garcia Company owns equipment that cost $78,400, with accumulated depreciation of $41,600. Record the sale of the equipment under the following three separate cases assuming Garcia sells the equipment for (1) $48,200 cash, (2) $36,800 cash, and (3) $31,700 cash.
On January 1, 20X9, Planet Corporation sold equipment for $400,000 to Star Corporation, its wholly owned subsidiary. Planet had paid $900,000 for this equipment, which had accumulated depreciation of $170,000. Planet estimated a $50,000 salvage value and depreciated the tractor using the straight-line method over 10 years, a policy that Star continued. In Planet's December 31, 20X9, consolidated balance sheet, this tractor should be included in fixed-asset cost and accumulated depreciation as: Cost AccumulatedDepreciation A. $ 900,000 $ 255,000 B. $ 900,000 $ 120,000 C. $ 730,000 $ 85,000 D. $ 730,000 $ 170,000 Option A Option B Option C Option D
Hauswirth Corporation sold (or exchanged) a warehouse in year 0. Hauswirth bought the warehouse several years ago for $72.500. and it has claimed $24,800 of depreciation expense against the building. Required: a. Assuming that Houswirth receives $59,700 in cash for the warehouse, compute the amount and character of Hauswirth's recognized gain or loss on the sale. b. Assuming that Hauswirth exchanges the warehouse in a like-kind exchange for some land with a fair market value of $59,700 compute Houswirth's realized gain or loss, recognized gain or loss, deferred gain or loss, and basis in the new land. c. Assuming that Houswirth receives $26.500 in cash in year 0 and a $57,000 note receivable that is payable in year 1, compute the amount and character of Hauswirth's gain or loss in year 0 and in year 1. Complete this question by entering your answers in the tabs below. Required a Required b Required c Assuming that Hauswirth receives $59,700 in cash for the warehouse, compute the amount…
Health Co. purchased land and building at a lump-sum price of P6,000,000. After the acquisition, Health Co. demolished the existing building and started the construction of a new one. Health Co. incurred P30,000 in razing the old structure.Materials salvaged from the demolition were sold for P7,500. Heatlh incurred the following additional costs: Legal fees in conveying title to land 10,000 Option paid for the land and old building acquired 3,000 Payments to tenants to vacate premises 6,000 Materials, labor and construction overhead incurred in the construction of the new building 4,250,000 Case 1: The land and old building have fair values of P2,500,000 and P5,000,000, respectively. Requirements: Allocate the costs. Provide the journal entries. Case 2: The old building is unusable and has an insignifacant fair value. Requirements: Allocate the costs. Provide the journal entries.
During the current year, Hitchcock Developers disposed of plant assets in the following transactions. Feb. 10 office equipment costing $24,000 was given to a scrap dealer at no charge. At the date of disposal, accumulated depreciation on the office equipment amounted to $21,800. Apr. 1 Hitchcock sold land and building to Claypool Associates for $900,000, receiving $100,000 cash and 5 years, 9 percent note receivables for the remaining balance. Hitchcock’s records showed the following amount: Land, $50,000; building, $550,000; accumulated depreciation: building (at the date of disposal), $250,000 Aug. 15 Hitchcock traded in an old truck for a new one. The old truck had cost $26,000, and its accumulated depreciation amounted to $18,000. The list price the new truck was $39,000, but Hitchcock received a $10,000 trade in allowance for the old truck and paid $28,000 in cash. Hitchcock includes trucks in its Vehicles account. Oct. 1 Hitchcock traded in its old computer system as part of the…
Central Purchasing Ltd. (CPL) owns the building it uses; it had an original cost of $8,096,000 and accumulated depreciation of $2,428,800 as of 1 January 20X2. On this date, the building (but not the land) was sold to a real estate Investment trust (REIT) for $7,596,000, which also was the building's fair value, and simultaneously leased back to CPL. The lease has a 15-year term and required payments on 31 December of each year. The payments are $646,000 with no transfer of title or purchase option. CPL will pay all of the building's operating and maintenance costs including property taxes and insurance. CPL's Incremental borrowing rate is 9%. The building is being depreciated straight-line with a full year's depreciation in the year of acquisition. (PV of $1, PVA of $1, and PVAD of $1.) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare entries for CPL to record the sale and leaseback of the building. (If no entry is required for a transaction/event, select "No…
During the current year, Hitchcock Developers disposed of plant assets in the following transactions. Feb. 10 Office equipment costing $24,000 was given to a scrap dealer at no charge. At the date of disposal, accumulated depreciation on the office equipment amounted to $21,800. Apr. 1 Hitchcock sold land and a building to Claypool Associates for $900,000, receiving $100,000 cash and a 5-year, 9 percent note receivable for the remaining balance. Hitchcock's records showed the following amounts: Land, $50,000; Building, $550,000; Accumulated Depreciation: Building (at the date of disposal), $260,000. Aug. 15 Hitchcock traded in an old truck for a new one. The old truck had cost $26,000, and its accumulated depreciation amounted to $18,000. The list price of the new truck was $39, 000, but Hitchcock received a $10,000 trade-in allowance for the old truck and paid $28, 000 in cash. Hitchcock includes trucks in its Vehicles account. Oct. 1 Hitchcock traded in its old computer system as…

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