1. What is the correct inital cost of the replacement equipment acquired on October 31? 2. What is the gain on sale of the office equipment on September 1?
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1. What is the correct inital cost of the replacement equipment acquired on October 31?
2. What is the gain on sale of the office equipment on September 1?
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- You were assigned to audit the Property, plant and equipment account of your continuing audit client Lolita Corp. for the period ended December 31, 2021. The PPE file in the permanent working paper and in the prior year working paper included the following schedule: All assets were acquired at the inception of operations at the beginning of 2019 and are being depreciated through the following policies: Office Building – Double-declining balance over 20 years (10% salvage value based on cost) Factory Building – SYD over 15 years (10% salvage value based on cost) Office Equipment – Straight-line method over 8 years (no salvage value) Factory Machineries – SYD over 10 years (10% salvage value based on cost) Transactions for 2021 were as follows: An new elevator system costing P800,000 was installed on the company’s Office Building and was completed in early January. On March 31, the company traded a new factory machinery with a cash…You were assigned to audit the Property, plant and equipment account of your continuing audit client Lolita Corp. for the period ended December 31, 2021. The PPE file in the permanent working paper and in the prior year working paper included the following schedule: All assets were acquired at the inception of operations at the beginning of 2019 and are being depreciated through the following policies: Office Building – Double-declining balance over 20 years (10% salvage value based on cost) Factory Building – SYD over 15 years (10% salvage value based on cost) Office Equipment – Straight-line method over 8 years (no salvage value) Factory Machineries – SYD over 10 years (10% salvage value based on cost) Transactions for 2021 were as follows: An new elevator system costing P800,000 was installed on the company’s Office Building and was completed in early January. On March 31, the company traded a new factory machinery with a cash…As the recently appointed auditor for Cheyenne Corporation, you have been asked to examine selected accounts before the 6-month financial statements of June 30, 2020, are prepared. The controller for Cheyenne Corporation mentions that only one account is kept for intangible assets. The account is shown below. Jan. 4 Jan. 5 Jan. 31 Feb. 11 March 31 April 30 June 30 Intangible Assets Research and development costs Legal costs to obtain patent Payment of 7 months' rent on property leased by Cheyenne Premium on common stock Unamortized bond discount on bonds due March 31, 2040 Promotional expenses related to start-up of business Operating losses for first 6 months Debit 934,000 72,960 86,800 93,600 228,800 259,000 Credit 234,000 Balance 934,000 1,006,960 1,093,760 859,760 953,360 1,182,160 1,441,160 Prepare the entries necessary to correct this account. Assume that the patent has a useful life of 10 years. (Credit account titles are automatically indented when amount is entered. Do not…
- As the recently appointed auditor for Bramble Corporation, you have been asked to examine selected accounts before the 6-month financial statements of June 30, 2020, are prepared. The controller for Bramble Corporation mentions that only one account is kept for intangible assets. The account is shown below. Intangible Assets Debit Credit Balance Jan. 4 Research and development costs 932,000 932,000 Jan. 5 Legal costs to obtain patent 72,480 1,004,480 Jan. 31 Payment of 7 months' rent on property leased by Bramble 85,400 1,089,880 Feb. 11 Premium on common stock 232,000 857,880 March 31 Unamortized bond discount on bonds due March 31, 2040 88,800 946,680 April 30 Promotional expenses related to start-up of business 216,800 1,163,480 June 30 Operating losses for first 6 months 247,500 1,410,980 Prepare the entries necessary to correct this account. Assume that the patent has a useful life of 10 years. (Credit account titles are automatically indented when amount is entered. Do not indent…As the recently appointed auditor for Bramble Corporation, you have been asked to examine selected accounts before the 6-month financial statements of June 30, 2020, are prepared. The controller for Bramble Corporation mentions that only one account is kept for intangible assets. The account is shown below. Intangible Assets Debit Credit Balance Jan. 4 Research and development costs 932,000 932,000 Jan. 5 Legal costs to obtain patent 72,480 1,004,480 Jan. 31 Payment of 7 months' rent on property leased by Bramble 85,400 1,089,880 Feb. 11 Premium on common stock 232,000 857,880 March 31 Unamortized bond discount on bonds due March 31, 2040 88,800 946,680 April 30 Promotional expenses related to start-up of business 216,800 1,163,480 June 30 Operating losses for first 6 months 247,500 1,410,980 Prepare the entries necessary to correct this account. Assume that the patent has a useful life of 10 years. (Credit account titles are automatically indented when amount is entered. Do not indent…As the recently appointed auditor for Sandhill Corporation, you have been asked to examine selected accounts before the six-month financial statements of June 30, 2023, are prepared. The controller for Sandhill mentions that only one account is kept for intangible assets. The entries in Intangible Assets since January 1, 2023, are as follows: INTANGIBLE ASSETS 4 5 11 30 30 Research costs Legal costs to obtain patent Payment of seven months' rent on property leased by Sandhill (February to August) Proceeds from issue of common shares Promotional expenses related to start-up of business Development stage costs (meet all six development stage criteria) Start-up costs for first six months of operations Account Titles and Explanation Debit Debit 1,043,600 57,000 50,400 159,000 222,000 314,000 Credit Credit 309,800 Balance 1,043,600 1,100,600 1,151,000 841,200 1,000,200 Prepare the journal entry or entries needed to correct this account. Allocate rent between the prepaid and expense accounts…
- You have been asked to carry out the audit of the property plant and equipment of Simons Engineering Limited for the year ended 31 March. The draft accounts show the following movements on non current assets in the year: Freehold Land & Buildings Plant & Machinery Motor Vehicles TOTAL Cost or Valuation GHC GHC GHC GHC At 1st April 353,000 406,000 173,000 932,000 Additions 292,000 86,000 65,000 443,000 Disposals - (29,000) (47,000) (76,000) At 31st March 645,000 463,000 191,000 1,299,000 Freehold Land & Buildings Plant & Machinery Motor Vehicles TOTAL Depreciation GHC GHC GHC GHC At 1st April 132,000 187,000 74,000 393,000 Charge for the year 12,900…You have been asked to carry out the audit of the property plant and equipment of Simons Engineering Limited for the year ended 31 March. The draft accounts show the following movements on non current assets in the year: Freehold Land & Buildings Plant & Machinery Motor Vehicles TOTAL Cost or Valuation GHC GHC GHC GHC At 1st April 353,000 406,000 173,000 932,000 Additions 292,000 86,000 65,000 443,000 Disposals - (29,000) (47,000) (76,000) At 31st March 645,000 463,000 191,000 1,299,000 Freehold Land & Buildings Plant & Machinery Motor Vehicles TOTAL Depreciation GHC GHC GHC GHC At 1st April 132,000 187,000 74,000 393,000 Charge for the year 12,900…As the recently appointed auditor for Bryan Corporation, you have been asked to examine selected accounts before the 6-month financial statements of June 30, 2020, are prepared. The controller for Bryan Corporation mentions that only one account is kept for intangible assets. The account is shown below. Intangible Assets Debit Credit Balance Jan. 4 Research and development costs 940,000 940,000 Jan. 5 Legal costs to obtain patent 75,000 1,015,000 Jan. 31 Payment of 7 months' rent on property leased by Bryan 91,000 1,106,000 Feb. 11 Premium on common stock 250,000 856,000 March 31 Unamortized bond discount on bonds due March 31, 2040 84,000 940,000 April 30 Promotional expenses related to start-up of business 207,000 1,147,000 June 30 Operating losses for first 6 months 241,000 1,388,000 Instructions Prepare the entry or entries necessary to correct this account. Assume that the patent has a useful life of 10…
- Assume REH AG, a hypothetical company, incurs expenditures of AC1,000 per month during the fiscal year ended December 31, 2019 to develop software for internal use. Under IFRS, the company must treat the expenditures as an expense until the software meets the criteria for recognition as an intangible asset, after which time the expenditures can be capitalized as an intangible asset. 1 What is the accounting impact of the company being able to demonstrate that the software met the criteria for recognition as an intangible asset on February 1 versus December 1? 2 How would the treatment of expenditures differ if the company reported under US GAAP and it had established in 2018 that the project was likely to be completed and the software used to perform the function intended?Study the information given below and answer the following questions:5.1 Calculate the profit or loss on the disposal of the equipment. 5.2 Prepare the following note to the financial statements as at 28 February 2020:* Property, plant and equipment INFORMATIONThe following balances appeared in the general ledger of Umzinto Traders on 01 March 2019, the beginning of the financial year:RVehicles 300 000Accumulated depreciation on vehicles 140 000Equipment 130 000Accumulated depreciation on equipment 75 000Additional information1) A new vehicle, cost price R160 000, was purchased on credit on 01 December 2019.2) Equipment with a cost price of R10 000, was sold for cash on 31 August 2019 for R2 000. The accumulated depreciation on the equipment sold amounted to R7 000 on 01 March 2019.3) Depreciation is calculated on equipment at 10% per annum on cost.4) Depreciation is calculated on vehicles at 20% per annum on the diminishing balance.As the recently appointed auditor for Blossom Corporation, you have been asked to examine selected accounts before the six-month financial statements of June 30, 2023, are prepared. The controller for Blossom mentions that only one account is kept for intangible assets. The entries in Intangible Assets since January 1, 2023, are as follows: INTANGIBLE L ) ) Research costs Legal costs to obtain patent Payment of seven months' rent on property leased by Blossom (February to August) Proceeds from issue of common shares Promotional expenses related to start-up of business Development stage costs (meet all six development stage criteria) Start-up costs for first six months of operations Show Transcribed Text Account Titles and Explanation (To correct intangible asset account) Show Transcribed Text ASSETS (To correct intangible asset account) (To record amortization expense) (To record amortization expense) Debit Debit 1,056,500 47,000 50,400 158,000 216,000 328,000 Credit Prepare the…