FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Related questions
Question
In 2021, Bratten Fitness Company made the following cash purchases:
- The exclusive right to manufacture and sell the X-Core workout equipment from Symmetry Corporation for $216,000. Symmetry created the unique design for the equipment. Bratten also paid an additional $10,500 in legal and filing fees to attorneys to complete the transaction.
- An initial fee of $325,000 for a three-year agreement with Silver’s Gym to use its name for a new facility in the local area. Silver’s Gym has locations throughout the country. Bratten is required to pay an additional fee of $6,600 for each month it operates under the Silver’s Gym name, with payments beginning in March 2021. Bratten also purchased $416,000 of exercise equipment to be placed in the new facility.
- The exclusive right to sell Healthy Choice, a book authored by Kent Patterson, for $35,000. The book includes healthy recipes, recommendations for dietary supplements, and natural remedies. Bratten plans to display the book at the check-in counter at its new facility, as well as make it available online.
Required:
Prepare a summary
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
Trending nowThis is a popular solution!
Step by stepSolved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Crest Corporation established its Poblacion branch in 2019. Merchandise costing P120,000 is shipped to this branch. During the initial year, the home office acquires an equipment for P80,000 to be carried in the branch books, and the branch maintains physical possession and use. The equipment has a useful life of 4 years. The branch sells 60 percent of the inventory for P100,800 on account and subsequently collected half of the amount. The branch remits 80 percent in cash to the Home Office. What is the correct Home Office account balance on the records of the branch?arrow_forwardAs of Jan. 1, 2020, ABC Corporation is constructing a new facility located in a community that has little livelihood sources. The entity received the land from the government on the condition that it hires 90% of its workers from the community throughout a 5-year period. The land is valued at P10,000,000. The construction of the building was partially financed by the entity and also the government. Information regarding the facility construction, government grant and funding sources can be seen in the attached image. By the end of 2020, construction is substantially completed. Date Amount Spent Jan. 1,2020 P 4,000,000 March 31,2020 5,000,000 June 30, 2020 8,000,000 Borrowing Interest Rate Principal Amount Specific Borrowing-Government 8% P 2,000,000 Genaral Borrowing A 9% 12,000,000 Genral Borrowing B 10% 4,000,000 All borrowings were outstanding throughout the year. Interest payments are due every Jan.1 1. How much is the capitalizable borrowing cost?…arrow_forwardWhat are the amounts capitalized for: Land, Building, Equipment, Furniture, and Land Improvements?arrow_forward
- On January 1, 2021, The Burgundy Winery purchased a new vineyard. The vineyard purchase consisted of a building, a bottling machine, cellar equipment, and land. The total purchase price was $5,250,000. The fair market value of each asset is as follows: the building, $1,800,000; the bottling machine, $1,200,000; the cellar equipment, $600,000; and the land, $2,400,000. e) Straight-line depreciation revised for the building Year Annual Expense Accumulated Depreciation at End of Year Annual Expense Calculation 2021 147,500.00 147,500.00 (1,575,000-100,000) / 10 2022 147,500.00 295,000.00 (1,575,000-100,000) / 10 2023 147,500.00 442,500.00 (1,575,000-100,000) / 10 2024 147,500.00…arrow_forwardSheridan Corporation owns and manages a small 10-store shopping centre, which it classifies as an investment property. Sheridan has a May 31 year end and initially recognized the property at its acquisition cost of $11.2 million on June 2, 2022. The acquisition cost consisted of the purchase price of $105 million, costs to survey and transfer the property of $460,000, and legal fees to acquire the property of $240,000. Sheridan determines that approximately 26% of the shopping centre's value is attributable to the land, with the remainder attributable to the building. The following fair values are determined: Date May 31, 2023 May 31, 2024 Fair Value $10,700,000 $10,594,000 May 31, 2025 $11,208,000 Sheridan expects the shopping centre building to have a 35-year useful life and a residual value of $1.428 million. Sheridan uses the straight-line method for depreciation.arrow_forwardApollo Medical Supplies Ltd borrowed $25 million to finance an investment in a laboratory for developing and testing surgical supplies on 1 July 2019. The loan is due 30 June 2029. The lender insisted on a debt covenant in the loan agreement, specifying that the leverage ratio not exceed 60%. Apollo Medical Supplies Ltd complied with the requirement in 2020 when the ratio of total liabilities to total tangible assets was 58%. Apollo Medical Supplies Ltd also invested in plant and equipment used exclusively to manufacture polyester surgical masks. However, due to a decline in demand for polyester surgical masks, analysts are predicting that the company may need to write-down some of its plant and equipment. Requireda) Debt covenants or restrictions are commonly used in lending agreements. Discuss how they are used to reduce agency problems that exist in the relationship between management and lenders.b) Why would management choose to enter into a lending agreement that contains a…arrow_forward
- Damian Company operates a construction company. On January 1, 2021, Damian Company negotiates a new contract with Horton Hockey Association and agrees to construct a large complex for the hockey association in four phases over a 12-month period at a total cost of $1,600,000. The complex will not be usable until all construction is complete. On January 1, 2021, Horton pays Damian a refundable deposit of $100,000 and agrees to four installment payments of $375,000. The installment payments are due on March 31, 2021, June 30, 2021, September 30, 2021, and December 31, 2021. Under the contract terms, Horton has the option of ending the contract if the association is dissatisfied with the construction. To terminate the contract, the hockey association must notify Damian Company before June 30, 2021. If the hockey association decides to terminate the contract, the association will receive the January 1, 2021, refundable deposit of $100,000. If the hockey association provides a timely notice…arrow_forwardPrincess Town Insurance Inc., located in a country which has a capital gains tax, purchased a building in February 2018 for $26,000,000. In March 2019, they spent $1, 800,000 to install solar panels for electricity in the building. The building was sold for $39,000,000 in 2020. The annual maintenance cost was $500,000. The cost of advertising the sale of the building and the legal fees amounted to $1,950,000. Capital losses were as follows:2017 - $200,0002018 - $250,000 Required:Calculate the capital gains tax in 2020, assuming a capital gains tax of 20%arrow_forwardTaylor Construction Inc. signed a contract with FSU to build a student residential building with two million dollars by 2021 August; FSU can only pay 1.8 million dollars if Taylor cannot complete the construction by September 1. According to the consideration of the four transaction price types, which type is for the following transaction?arrow_forward
- BTS Inc. started construction of a building for its own use on January 1, 2021. Upon completion at December 31, 2021, construction costs totaled P2,150,000, which were incurred evenly during the construction period. Prior to the start of construction, Jules Company obtained a P1,000,000, 12%, 5-year loan from ABC Bank to finance the project. During periods that construction costs were low, the company temporarily investment the proceeds and earned interest income of P5,000. In addition to the specific borrowing, prior to the construction, the company had a general borrowing amounting to P60,000 with interest of 15% and a four-year term that was used in part in the self construction?How much is the capitalized interest on the self-constructed building of BTS Inc?arrow_forwardColorado Construction Co., a private company that reports under ASPE, was contracted by a provincial government to build a bridge over a river. The government owns the land on both sides of the river and it agreed to pay Colorado a fixed fee of $29,750,000 for the bridge. Colorado initially estimated the cost to build the bridge to be $21,500,000. Colorado's year end is December 31. Work began under the contract on July 1, 2019 and was completed on September 30, 2021. Construction activities are summarized below by year: Estimated costs to Amount during the year collected during the year Year Construction costs Progress billings incurred during the year complete (excludes already incurred costs 2019 $8,250,000 $13,000,000 $10,000,000 $12,000,000 2020 12,000,000 5,000,000 10,000,000 6,000,000 2021 5,250,000 9,750,000 11,750,000 Required: a. Provide the journal entries that Colorado would have to record for each year of the bridge contract. Use costs to determine the percentage of…arrow_forwardCrest Corporation established its Poblacion branch in 2019. Merchandise costing P120,000 is shipped to this branch. During the initial year, the home office acquires an equipment for P80,000 to be carried in the branch books, and the branch maintains physical possession and use. The equipment has a useful life of 4 years. The branch sells 60 percent of the inventory for P100,800 on account and subsequently collected half of the amount. The branch remits 80 percent in cash to the Home Office. What is the correct Home Office account balance on the records of the branch? Present solution in good accounting form.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
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:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education