Bob Joseph is evaluating two recent trnsactions involving exchanges of industrial machinery. In one case, the exchange has commercial substances. In the second situation the exchange lacks commercial substnce. Explain to Bob the differences in accounting for these two-situations

Bob Joseph is evaluating two recent trnsactions involving exchanges of industrial machinery. In one case, the exchange has commercial substances. In the second situation the exchange lacks commercial substnce. Explain to Bob the differences in accounting for these two-situations

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

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter12: Nonrecognition Transactions

Section: Chapter Questions

Problem 11DQ

See similar textbooks

Related questions

Q: If a contract modification adds distinct goods or services and the contract price increases by an…

A: Any modification in the price or scope or both with regard to a contract by the parties to the…

Q: 1. Which of the following costs shall be considered as period cost instead of product cost?…

A: Costs that are directly incurred in manufacturing activity are generally considered product costs.…

Q: What type of "event" results in goodwill being recorded on a company's balance sheet? How is…

A: Goodwill is an non-physical asset i.e. intangible. It shows the customer base in loyalty or brand…

Q: 2. Mr. Ahmed sold an item, which is damaged prior to delivery for an intention from seller's…

A: Commerce is regarded as the process of transfer of goods or any services in terms of money or any…

Q: Which of the following statements is true? I. Loss from theft is classified a a nonreciprocal…

A: Introductions:- The following statements are true as per provisions as follows under:- Loss from…

Q: How mining industries record the assets, liabilities, provisions and foreign exchange transactions…

A: Accounting is the process of recording a company's financial transactions. Summarizing, analysing,…

Q: Sawyer Corporation has a machine (Machine A) that it acquired on 1/1/12 for $360,000. On 12/31/12…

A: SOLUTION- SELLING PRICE OF SOMETHING IS THE PRICE FOR WHICH IT IS SOLD.

Q: For a non-monetary exchange of plant assets, accounting recognition should not be given to a O a.…

A: for a nonmonetary exchange of plant assets accounting recognition should not be given to "Gain when…

Q: Stan Ott is evaluating two recent transactions involving exchanges of equipment. In one case, the…

A: Accounting changes: Accounting changes can be defined as changes in accounting principles,…

Q: A company should immediately recognize: A) any gain when it constructs a piece of equipment at a…

A: Matching principle: According to this principle, the expense should be recognized when it is…

Q: A company should record an asset called "Goodwill" when it purchases another company for an amount…

A: Goodwill is one of the intangible assets.

Q: a) In your own words, explain how do we account for service costs included within a contract to…

A: Disclaimer: “Since you have asked multiple question, we will solve the first question for you. If…

Q: When the franchisor supplies equipments and inventories without a reasonable profit, part of the…

A: Solution: As per the provisions, The franchise agreement may include terms where franchisor is to…

Q: Which one among the following conditions is NOT a condition of Murabaha: - Payment may be made…

A: Murabaha, also known as cost-plus finance, is an Islamic financing system in which the buyer and…

Q: The restriction that manufacturers should not market a new product that is legally similar to that…

A: A copyright is usually used for creative and artistic work. A patent is usually used for new and…

Q: Two accounting students were discussing the timing of revenue recognition for long-term construction…

A: Revenue Recognition Concept: Under GAAP, Revenue Recognition Concept explains the conditions of…

Q: If you had to decide whether to continue making a component part or to begin buying the part from an…

A: This is a case of make or buy decision. There are both quantitative and qualitative factors which…

Q: Under PFRS 15, which of the following factors indicates that the revenue from contracts with…

A: Under IFRS 15 A performance obligation is on the seller or service provider who has an obligation…

Q: Which of the following statements regarding goodwill is false? A company must review its goodwill…

A: Solution: Following statement regarding goodwill are true: 1. A company must review its goodwill for…

Q: Bell International can estimate the amount of loss that will occur if a foreign government…

A: Contingent LiabilityContingent liability is one form of liability that arises based on a particular…

Q: ell International can estimate the amount of loss that will occur if a foreign government…

A: Contingent Liability Contingent liability is one form of liability that arises based on a particular…

Q: According to PAS 18 Revenue, which of the following is not a criterion to be satisfied before…

A: As Per PAS 18, Criteria of Revenue recognition is as follows: The outcome of the transaction is…

Q: The main difference between U.S. accounting standards and international accounting standards when…

A: US GAAP refers to the accounting standards that are endorsed by the Securities and Exchange…

Q: 6.) In reference to the determination of goodwill impairment, which of the following statements is…

A: Goodwill impairment occurs when the recognized goodwill associated with an acquisition is greater…

Q: P has rendered construction services for M. M is currently illiquid due to the effects of the…

A: a bill of exchange is definedas an instrument in writing containing an unconditional order, signed…

Q: Answer of the following question related to these characteristics and constraints. Allied…

A: Accounting Principle: They are the general rules and guidelines to be followed by companies in…

Q: Consider the following independent situations. For each of the situations described, suggest the…

A: Introduction: A liability is anything that a person or corporation owes, generally a monetary…

Q: The cost of a nonmonetary asset acquired in exchange for another nonmonetary asset when the exchange…

A: Fair Value:Fair value is the price settled and agreed by both buyer and seller, each of them acting…

Q: Which of the following conditions would support recognition of revenue? The seller’s price to the…

A: Revenue recognition principle states that the revenue should be recorded only when the product and…

Q: Which of the following is not true when a company allocates a transaction price to separate…

A: Hello. Since your question has multiple parts, we will solve first question for you. If you want…

Q: When it comes to a manufacturer who is negligently manufacture goods, a. only the consumer who…

A: The consumers expect the day to day products to be safe and harmless. If their is any negligence in…

Q: Under PFRS 15, when shall a consignor recognize revenue from its consignment sales? A When the…

A: SOLUTION- PERFORMANCE OBLIGATION IS A PROMISE TO DELIVER THE GOODS OR SERVICES IN LIEU OF PAYMENT…

Q: While comparing the performance of all the affiliates of an American Multinational company, the CEO…

A: When a company has one or more subsidiaries in a foreign country that uses different currency, the…

Q: Which of the following is not an external indication of impairment? An unexpected decline in the…

A: Asset may be impaired by various number of reasons. These may be internal or external to the…

Q: A. an agreement between a private sector entity and a contractor for the supply of goods or services…

A: Contractor A contractor can be an individual or a company that will undertake to do specific work…

Question

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

Stan Ott is evaluating two recent transactions involving exchanges of equipment. In one case, the exchange has commercial substance. In the second situation, the exchange lacks commercial substance. Explain to Stanthe differences in accounting for these two situations.
Centennial Company developed a trademark to distinguish its products from those of the competitors. Through advertising and other means, the entity is seeking to establish significant product identification to increase future sales. The similarity between the trademark costs and other intangible and operating costs has caused some confusion over proper accounting. The following items are being treated as part of the cost of the trademark: Marketing research to study consumer tastes Design costs of trademark Legal fees of registering trademark Advertising to establish recognition of trademark Registration fee with Patent Office 400,000 1,500,000 150,000 200,000 50,000 What is the initial cost of the trademark?
* .ll B/s | 312 1:58 PM • Dani signed a Cheque to Rami's order with a value of $10000 payable by BLOM BANK.The cheque bears an issuance date of 15/5/2020.Few days later, Rami signed his name on the back of the cheque and handed it to Rama.This cheque is payable: * at any time from 15/5/2020 and thereafter after 8 days from its issuance date on its maturity date only on 15/5/2020 The purchaser of the business concern must not pay the price until after the expiry of the as from completing the publication formalities. * 30 days 10 days 25 days 20 Days
How might your answers to the breach of contract litigation and the industrial espionage litigation change if Greenlaw used IFRS? Complete the statement below with regard to the breach-of-contract litigation. If an unfavorable outcome is probable and there exists a range of estimates with no amount in the range more likely than any other amount in the range, IFRS require that ___ of the range be used to measure the liability. Complete the statement below with regard to the industrial espionage litigation. With regard to the industrial espionage litigation, under IFRS Greenlaw would record a debit to ___ in the amount of ___ and a credit to .
Which of the following statements is false? a. The monetary unit assumption is used under IFRS. b. Under IFRS, companies may use fair value for property, plant, and equipment. c. The FASB and IASB are no longer working on a joint conceptual framework project. d. Under IFRS, the concept of prudence is not considered.
2. Mr. Ahmed sold an item, which is damaged prior to delivery for an intention from seller's control, and then the buyer can: a) Pay the invoice amount and accept the goods b) Accept the goods and pay later c) Accept the goods, but sue for damages d) Rescind the contract
In your own words, briefly explain a 'qualifying asset' and how we report exchange rate differences relating to the acquisition of qualifying assets? Contrast this with the treatment for assets that are not qualifying assets
Which of the following factors, if present, would indicate that a transaction is not a contribution? a. The resource provider entered into the transaction voluntarily. b. The resource provider received value in exchange. c. The transfer of assets was unconditional. d. The organization has discretion in the use of the assets received.
Transfer pricing is a significant area of concern for taxing authorities and multinational entities (MNE). Examine at least two potential transfer pricing issues that create concern for both the Internal Revenue Service (IRS) and MNEs and provide an example that demonstrates the effects of the issues.
* Your answer is incorrect. In a nonmonetary exchange of plant assets, accounting recognition should not be given to a portion of the gain when the exchange has no commercial substance and cash is received (when the cash received is less than 25% of the fair value of the exchange). a portion of the gain when the exchange has no commercial substance and cash is paid (when the cash paid is less than 25% of the fair value of the exchange). a gain when the exchange has commercial substance. a loss when the exchange has no commercial substance.
When an entity's management resolves that the entity will offer to repair a defect it has recently discovered in one of its products, even though the nature of the defect is such that purchasers of the product would not expect the entity to do so: it must immediately recognise a liability. it must immediately recognise a liability, if it can be measured reliably. it will never recognise a liability as the offer to repair was not part of the contract of sale. it will only need to recognise a liability when the entity makes the offer public, or commits itself in some other way to make the repairs.
Transfer pricing is a significant area of concern for taxing authorities and multinational entities (MNE). (1) Examine at least two potential transfer pricing issues that create concern for both the İnternal Revenue Service (IRS) and MNES and (2) provide an example that demonstrates the effects of the issues.