On Day 1, Tomay Co. commits to sell a financial asset. The sale transaction will be settled on Day 4. If Tomay Co. appropriately derecognizes the asset on Day 4, Tomay Co. must have adopted the settlement date accounting.
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- What should be done with the transaction on August 2019? a. Disclose as provision since the occurrence is probable. b. Recognize as provision since it is probable that Buwis Buhay will lose the case. c. Disclose as contingent asset because even if it is probable that the company will be successful, contingent asset is never recognized unless realized. d. Recognize as contingent liability since it is probable that Buwis Buhay will be indebted.T/F 1. It is reserved at the moment of the perfection of the contract for if the right to repurchase is agreed upon afterwards, there is only a promise to sell which produces different rights and effect and is governed by Article 1616. 2.If there is an agreement as to the period of redemption, the period agreed upon cannot exceed six (6) years. 3.If the thing which is the object of the contract has been partially lost, the contract shall be without any effect. The reason is because there is an absence of an essential element, that is, the object. 4.It is a potestative condition because when exercised, the right of ownership acquired by the vendee is extinguished. 5. The essence of a pacto de retro sale is that title and ownership of the property sold is immediately vested in the vendee a retro, subject to the resolutory condition of repurchase by the vendor a retro within the redemption period. 6.Article 1493 states that "Where the parties purport a sale of specific goods, and the…If a loss from sale or exchange of property between related parties is disallowed and the property is subsequently sold to an unrelated party, a.The disallowed loss is lost forever. b.The disallowed loss may be used if there is a further loss on the subsequent sale. c.The unrelated party may claim the loss previously disallowed. d.An amended return may be filed to claim the loss previously disallowed. e.The disallowed loss may be used to offset gain on the subsequent sale.
- 6. Buwis Buhay Incorporated had several outstanding obligations on December 31, 2019. The brief descriptions listed below can be ascertained from these liabilities. r. In June 2019, Buwis Buhay was involved in a court case amounting to P10,000,000. The attorney assessed that it is probable that the company will win the case with P4,500,000 as the best estimate of the reward. • In August 2019, Baguio City brought an action against the company for polluting the surrounding rivers with its waste products costing P5,000,000. It is probable that Baguio City will be successful but the amount of damages Buwis Buhay might have to pay is not to exceed P2,500,000. • In December 2019, another litigation case amounting to P20,000,000 was filed against Buwis Buhay for injuring pedestrians due to its renovation projects within the premise. This court case is seen to have remote likelihood of occurrence because the evidences filed are not strong.Entity A issues an instrument that is re-purchasable by delivering cash or another financial asset. FHo 4. However, Entity A's All rights belongs to respective author Downloaded by era 2020 ean cszmoeaton@gma.com) buving the original co 338 PAS 32 contractual obligation to repurchase the instrument is conditional on the holder (the counterparty) exercising its right to redeem. Which of the following statements is correct from the perspective of Entity A? a. The instrument is a financial liability because when the holder exercises its redemption right, Entity A does not have the unconditional right to avoid making the payment. b. The instrument is an equity instrument because Entity A's contractual obligation to deliver cash or another financial asset is conditional on the holder exercising its right to payment. c. Entity A initially classifies the instrument as an equity instrument. However, when the holder exercises its redemption right, the instrument is reclassified to financial…Which of the following statements is not applicable to contract acquisition costs under ASC Topic 606 guidance for revenue recognition? Incremental costs of acquiring a contract must be capitalized and amortized over the life of the contract. Costs that would be incurred regardless of whether a contract is obtained are not capitalized. The capitalization requirement is subject to a practical expedient. Costs must be capitalized even if the amortization period is one year or less.
- TRUE OR FALSE? The prior period will be affected if during the current year the management of an entity decides to classify a non currrent asset as held for sale.Which of the following statements regarding capital asset holding periods is false? Group of answer choices A. Trade dates, rather than settlements dates, are used to determine the date of acquisition and sale. B.The holding period for property received as a gift usually includes the holding period of the donee. C.The holding period for property acquired from a decedent is long term even if the property is sold less than one year after it was acquired. D. A holding period of exactly one year or more is long term.When should a transfer of receivables be recorded as a sale? A) The buyer surrenders controlof the receivables to the seller. B) The transferor maintains effective control over the transferred assets through an agreement to repurchase or redeeem them prior to their maturity. C) The transferee cannot pledge or exchange the transferred assets. D) The transferred asstes are isolated from the transferor.
- In a sale-leaseback transaction, the owner of an asset sells it and immediately leases it back from the new owner.The FASB Accounting Standards Codification represents the single source of authoritative U.S. generally acceptedaccounting principles.Required:1. Obtain the relevant authoritative literature on disclosure requirements pertaining to a seller-lessee in a saleleasebacktransaction. Use your institution’s Academic Accounting Access to the FASB Accounting StandardsCodification ( www.fasb.org ) or through your school library’s subscription to a research database thatincludes the Codification. What is the specific citation that describes the guidelines for determining the disclosurerequirements in the notes to the financial statements?2. List the disclosure requirements.The following three cases relate to (1) the possible accrual or (2) the possible disclosure byother means of a loss contingency. Case 1A company offers a one‐way warranty for the product that it manufactures. A history ofwarranty claims has been compiled, and the probable amount of claims related to sales for agiven period can be determined. Case 2Following the date of a set of financial statements, but before the issuance of the financialstatements, a company enters into a contract that will probably result in a significant loss tothe company. The amount of the loss can be reasonably estimated. Case 3A company has adopted a policy of recording self‐insurance for any possible losses resultingfrom injury to others by the company’s vehicles. The premium for an insurance policy for thesame risk from an independent insurance company would have an annual cost of $2,000.During the period covered by the financial statements, no accidents involving the company’svehicles resulted in injury to…Question 6 of 30. Which of the following items increases the basis of property received in a partially nontaxable exchange? O Cash paid in the exchange. Cash received in the exchange. Liabilities transferred. Recognized loss on the taxable portion of the exchange.