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ABC Company acquires its only building on January 1, Year 1, at a cost of $4,000,000. The building has a 20-year life, zero residual value, and is
Required: 1-Determine the amounts to be reflected in the
2- Complete Journal entries to account for the building under the revaluation model for Year 1-4.
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- In year 0, Canon purchased a machine to use in its business for $56,000. In year 3, Canon sold the machine for $42,000. Between the date of the purchase and the date of the sale, Canon depreciated the machine by $32,000. (Loss amounts should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.) a. What are the amount and character of the gain or loss Canon will recognize on the sale, assuming that it is a partnership? Total Gain/Loss Recognized Character of Recognized Gain/Loss Ordinary Gain/Loss 1231 gain/Lossarrow_forwardsarrow_forwardOn January 1, Mitzu Company pays a lump-sum amount of $2,600,000 for land, Building 1, Building 2, and Land Improvements 1. Building 1 has no value and will be demolished. Building 2 will be an office and is appraised at $793,000, with a useful life of 20 years and a $75,000 salvage value. Land Improvements 1 is valued at $427,000 and is expected to last another 14 years with no salvage value. The land is valued at $1,830,000. The company also incurs the following additional costs. Cost to demolish Building 1 Cost of additional land grading Cost to construct Building 3, having a useful life of 25 years and a $398,000 salvage value Cost of new Land Improvements 2, having a 20-year useful life and no salvage value Problem 8-3A (Algo) Part 3 3. Using the straight-line method, prepare the December 31 adjusting entries to record depreciation for the first year these assets were in use. View transaction list Journal entry worksheet 2 3 4 Record the year-end adjusting entry for the…arrow_forward
- Salem Amusement Park paid $400,000 for a concession stand. Salem started out depreciating the building using the straight-line method over 20 years with a residual value of zero. After using the concession stand for four years, Salem determines that the building will remain useful for only four more years. Record Salem's depreciation on the concession stand for year five using the straight-line method. (Record debits first, then credits. Exclude explanations from any journal entries.) Date Journal Entry Accounts Debit Creditarrow_forwardOn January 1, Mitzu Co. pays a lump-sum amount of $2,600,000 for land, Building 1, Building 2, and Land Improvements 1. Building 1 has no value and will be demolished. Building 2 will be an office and is appraised at $644,000, with a useful life of 20 years and a $60,000 salvage value. Land Improvements 1 is valued at $420,000 and is expected to last another 12 years with no salvage value. The land is valued at $1,736,000. The company also incurs the following additional costs. Cost to demolish Building 1 . $ 328,400 Cost of additional land grading. $175,400 Cost to construct Building 3, having a useful life Cost of new Land Improvements 2, having a 20-year of 25 years and a $392,000 salvage value 2,202,000 useful life and no salvage value. 164,000 Required 1. Prepare a table with the following column headings: Land, Building 2, Building 3, Land Improvements 1, and Land Improvements 2. Allocate the costs incurred by Mitzu to the appropriate columns and total each column. 2. Prepare a…arrow_forwardAshvinnarrow_forward
- Brix Co owns a building which it uses as its office, warehouse and garage. The land is carried as a separate non-current tangible asset in the statement of financial position. Brix Co has a policy of regularly revaluing its tangible non-current assets. The original cost of the building on 1 January 2006 was $2.1 million, and at that date it was estimated to have a useful economic life of 20 years, with no residual value. The company adopted the revaluation model of IAS 16 in 2012 and the building was valued at subsequent valuations as follows: 31 December 2012 $2.6 million 31 December 2015 $2.4million At each revaluation date the remaining useful life remains unchanged. Brix Co also owns a brand name, which it acquired 1 January 2014 for $1 million. The brand name is being amortised over 10 years and has a carrying amount at 31 December 2015 of $800,000. A brand specialist valued Miami's brand name at market value of $780,000 on the same date and Miami's chief accountant calculated…arrow_forwardSmith Company is an IFRS reporter. After 3 full years of use, the Smith Company revalues equipment with a carrying value of $970,000 to its fair value of $1,190,000 using the accumulated depreciation elimination method. The original cost of the equipment is $1,390,000 and the equipment has a useful life of 10 years with no scrap value. Smith depreciates under the straight-line method. What is the new carrying value of the asset? Group of answer choices $970,000 $1,390,000 $1,110,000 $1,190,000arrow_forwardSaint John Corporation prepares its financial statements according to IFRS. On June 30, 2016, the company purchased a franchise for $1,200,000. The franchise is expected to have a 10-year useful life with no residual value. Saint John uses the straight-line amortization method for all intangible assets. On December 31, 2016, the end of the company’s fiscal year, Saint John chooses to revalue the franchise. There is an active market for this particular franchise and its fair value on December 31, 2016, is $1,180,000. Required: 1. Calculate amortization for 2016. 2. Prepare the journal entry to record the revaluation of the patent. 3. Calculate amortization for 2017.arrow_forward
- Sage Ltd. owned several manufacturing facilities. On September 15 of the current year, Sage decided to sell one of its manufacturing buildings. The building had cost $6,325,000 when originally purchased 5 years ago, and had been depreciated using the straight-line method with no residual value. Sage estimated that the building had a 25-year life when purchased. Prepare the journal entry to record the sale of the building on Sage's books, assuming 5 years of depreciation has already been recorded in the accounts to the date of disposal. The building was sold for $5,250,000 cash. (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 0 for the amounts.) Date Account Titles and Explanation Debit Credit Sept. 15 List of Accounts…arrow_forwardOn June 1, 2015, Skylark Enterprises (not a corporation) acquired a retailstore building for $500,000 (with $100,000 being allocated to the land). Thestore building was 39-year real property, and the straight-line cost recovery methodwas used. The property was sold on June 21, 2019, for $385,000.a. Compute the cost recovery and adjusted basis for the building using Exhibit 8.8from Chapter 8.b. What are the amount and nature of Skylark’s gain or loss from disposition ofthe property? What amount, if any, of the gain is unrecaptured § 1250 gain?arrow_forwardCase E Sanders Company purchased the following on January 1, 2019: Office equipment at a cost of $60,000 with an estimated useful life to the company of three years and a residual value of $15,000. The company uses the double-declining-balance method of depreciation for the equipment. Factory equipment at an invoice price of $880,000 plus shipping costs of $20,000. The equipment has an estimated useful life of 100,000 hours and no residual value. The company uses the units-of-production method of depreciation for the equipment. A patent at a cost of $330,000 with an estimated useful life of 15 years. The company uses the straight-line method of amortization for intangible assets with no residual value. The company's year ends on December 31. Required: 1-a. Prepare a partial depreciation schedule of office equipment for 2019, 2020, and 2021. 1-b. Prepare a partial depreciation schedule of factory equipment. The company used the equipment for 8,000 hours in 2019, 9,200 hours in 2020, and…arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
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