In 2020, Port Company sold the entire working interest to Frank Company for:$100,000. In 2019, Port Company recognized impairment of $20,000 on this lease.In 2018, Port Company purchased the working interest of an unproved lease for16.a. $70,000b. $110,000Assume instead that the property was assessed on a group basis and sold forc. $70,000d. $110,000REQUIRED: Give the entry to record the sale in each of the above situationsassuming that Port Company is a successful efforts company.

The journal entry is very important for the accounting process because the business transaction is…

16. In 2018, Port Company purchased the working interest of an unproved lease for $100,000. In 2019, Port Company recognized impairment of $20,000 on this lease. In 2020, Port Company sold the entire working interest to Frank Company for: a. $70,000 b. $110,000 Assume instead that the property was assessed on a group basis and sold for: c. $70,000 d. $110,000 REQUIRED: Give the entry to record the sale in each of the above situations, assuming that Port Company is a successful efforts company.

16. In 2018, Port Company purchased the working interest of an unproved lease for $100,000. In 2019, Port Company recognized impairment of $20,000 on this lease. In 2020, Port Company sold the entire working interest to Frank Company for: a. $70,000 b. $110,000 Assume instead that the property was assessed on a group basis and sold for: c. $70,000 d. $110,000 REQUIRED: Give the entry to record the sale in each of the above situations, assuming that Port Company is a successful efforts company.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter12: Intangibles

Section: Chapter Questions

Problem 5RE: Mystic Pizza Company purchased a patent from Prime Pizza Plus on January 1, 2019, for 72,000. The...

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Determining Type of Lease and Subsequent Accounting On January 1, 2019, Caswell Company signs a 10-year cancelable (at the option of either party) agreement to lease a storage building from Wake Company. The following information pertains to this lease agreement: 1. The agreement requires rental payments of 100,000 at the beginning of each year. 2. The cost and fair value of the building on January 1, 2019, is 2 million. The storage building has not been specialized for Caswell. 3. The building has an estimated economic life of 50 years, with no residual value. Caswell depreciates similar buildings according to the straight-line method. 4. The lease does not contain a renewable option clause. At the termination of the lease, the building reverts to the lessor. 5. Caswells incremental borrowing rate is 14% per year. Wake set the annual rental to ensure a 16% rate of return (the loss in service value anticipated for the term of the lease). Caswell knows the implicit interest rate. 6. Executory costs of 7,000 annually, related to taxes on the property, are paid by Caswell directly to the taxing authority on Dec. 31 of each year. Required: 1. Determine what type of lease this is for the lessee. 2. Prepare appropriate journal entries on the lessees books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2019 and 2020.
Lessee and Lessor Accounting Issues Diego Leasing Company agrees to provide La Jolla Company with equipment under a noncancelable lease for 5 years. The equipment has a 5-year life, cost Diego 25,000, and will have no residual value when the lease term ends. The fair value of the equipment is 30,000. La Jolla agrees to pay all executory costs (500 per year) throughout the lease period directly to a third party. On January 1, 2019, the equipment is delivered. Diego expects a 14% return on its net investment. The five equal annual rents are payable in advance starting January 1, 2019. Required: 1. Assuming this is a sales-type lease for the Diego and a finance lease for the La Jolla, prepare a table summarizing the lease and interest payments suitable for use by either party. 2. Next Level On the assumption that both companies adjust and close books each December 31, prepare journal entries relating to the lease for both companies through December 31, 2020, based on data derived in the table. Assume that La Jolla depreciates similar equipment by the straight line method
Mystic Pizza Company purchased a patent from Prime Pizza Plus on January 1, 2019, for 72,000. The patent has a remaining legal life of 9 years. Prepare the journal entries to record the acquisition and the amortization for 2019, assuming Mystic Pizza amortizes its patents using the straight-line method over the life of the asset.
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leasehold improvement? warehouse space. The entity had an option to renew the lease During January 2021, the entity made substantial improvement On January 1, 2019, Averse Company signed a 12-year lease for on this leasehold improvement for 2021. On December 31, 2021, the entity intended to exercise the renewal option. The entity had taken a full year depreciation to the warehouse. The cost of the improvement was P540,000 with an estimated useful life of 15 years. On December 31, 2021, w hat is the carrying amount of the Warehouse space. The entity had an option to renew the lease or an additional 8-year period on or before January 1, 2022. i this leasehold improvement for 2021. a. 486,000 b. 504,000 . 510,000 d. 513,000
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Hancock Company leased many assets and capitalized most of the leased assets. On December 31, 2020, the entity had the following balances in relation to a piece of specialized equipment: Equipment under finance lease 4,000,000 Accumulated depreciation 2,465,000 Lease liability 1,300,000 Depreciation has been recorded up to end of the year, and no accrued interest is involved. On December 31, 2020, the entity decided to purchase the equipment for P 1,600,000 and paid cash to complete the purchase. Required: Prepare journal entry to record the actual purchase of the equipment on the books Hancock Company.
renewal had a full depreciation warehouse The had an to the lease During the improvement On is the of the to the The of was P540,000 on this for 2021. On the to the Problem 34-21 (AICPA Adapted) At the beginning of current year, Hart Company signed an agreement to operate as a franchisee for an initial franchise fee of P6,000,000. On the same date, the entity paid P2,000,000 and agreed to pay the balance in four equal annual payments of P1,000,000 at every year-end. The down payment is not refundable and no future services are required of the franchisor. The entity can borrow at 14% for a loan of this type. Present value of 1 at 14% for 4 periods 0.59 Present value of an ordinary annuity of 1 at 14% for 4 periods What amount should be recorded as initial cost of the franchise? a. 6,760,000 b. 6,000,000 C. 4,910,000 d. 4,360,000 Problem 34-22 (AICPA Adapted) On January 1, 2019, Averse Company signed a 12-year lease for an additional 8-year period on or before January 1, 2022. i this…
Alexander Company acquired the following three unexplored leases : July 1, 2019 Lease A $ 500,000 August 15, 2019 Lease B $300,000 October 10 , 2019. Lease C $ 400,000 All leases are classified as individually significant . a.On December 31, 2019, Lease A is determined to be 45% impaired. Lease B and C are not impaired. b.On December 31, 2020, Lease A is determined to be impaired a total of 80%, Lease C, 50% Lease B is not impaired c.On December 31, 2021, Lease A is considered to be 100% impaired and is abandoned. Lease B is 20% impaired and a well on Lease C found proved reserves. Required : Prepare journal entries for all of the above transactions except the initial purchase .
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