In return for equipment with a fair worth of 150,000, Travis Co. chose to form a corporation and issue 5000 shares of ordinary stocks with a par value of P20 that trade at P25 on the stock market. Similar equipment was purchased by Travis Co. for $60,000 and is used similarly. The equipment has no salvage value and is depreciated over a 5-year period using the straight-line approach. How much does the first year's depreciation cost

In return for equipment with a fair worth of 150,000, Travis Co. chose to form a corporation and issue 5000 shares of ordinary stocks with a par value of P20 that trade at P25 on the stock market. Similar equipment was purchased by Travis Co. for $60,000 and is used similarly. The equipment has no salvage value and is depreciated over a 5-year period using the straight-line approach. How much does the first year's depreciation cost

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

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 7RE: Bliss Company owns an asset with an estimated life of 15 years and an estimated residual value of...

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Bliss Company owns an asset with an estimated life of 15 years and an estimated residual value of zero. Bliss uses the straight -line method of depreciation. At the beginning of the sixth year, the assets book value is 200,000 and Bliss changes the estimate of the assets life to 25 years, so that 20 years now remain in the assets life. Explain how this change will be accounted for in Blisss financial statements, and compute the current and future annual depreciation expense.
During its inception, Devon Company purchased land for $250,000 and a building for $200,000. After exactly 3 years, it transferred these assets and cash of $50,000 to a newly created subsidiary, Regan Company, in exchange for 20,000 shares of Regan's $10 par value stock. Devon uses straight-line depreciation. Useful life for the building is 20 years, with zero residual value. An appraisal revealed that the building has a fair value of $250,000. What will Devon record as Additional Paid in Capital as a result of this transaction? Group of answer choices additional paid-in capital of $0. additional paid-in capital of $270,000. additional paid-in capital of $350,000. additional paid-in capital of $300,000.
Hauswirth Corporation sold (or exchanged) a warehouse in year 0. Hauswirth bought the warehouse several years ago for $65,000, and it has claimed $23,000 of depreciation expense against the building. (Loss amounts should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable. Round your final answers to the nearest whole dollar amount.) Required: a. Assuming that Hauswirth receives $50,000 in cash for the warehouse, compute the amount and character of Hauswirth's recognized gain or loss on the sale. b. Assuming that Hauswirth exchanges the warehouse in a like-kind exchange for some land with a fair market value of $50,000, compute Hauswirth's realized gain or loss, recognized gain or loss, deferred gain or loss, and basis in the new land. c. Assuming that Hauswirth receives $20,000 in cash in year O and a $50,000 note receivable that is payable in year 1, compute the amount and character of Hauswirth's gain or loss in year O and in year 1.
Barton and Barton Company (B&B) purchased construction equipment for $57 million. The equipment was placed in service at the beginning of 20x1. Management estimated the equipment's residual value to be $2 million and used the sum-of-the-years’-digits method to depreciate the equipment over a 10-year life. At the beginning of 20x4, B&B decided to change to the straight-line method. Ignoring income taxes, prepare the journal entry relating to the equipment for 20x4. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5 and 5,000,000 should be entered at 5.0).)
2) Several years ago, Pilot International purchased 70% of the outstanding stock of Skyway Incorporated, at a time when Skyway's book values were equal to its fair values. On January 1, 2011 Skyway purchased a truck for $80,000 which had no salvage value with a useful life of 8 years, depreciated on a straight-line basis. On January 1, 2014, Skyway sold the truck to Pilot Corporation for $28,000. The truck was estimated to have a five-year remaining life on this date, and no salvage value. All affiliates use the straight-line depreciation method. Required: Prepare all relevant entries with respect to the truck. 1. Record the journal entries on Pilot's books for 2014. 2. Record the journal entries on Skyway's books for 2014. 3. Prepare the consolidation entries required for Pilot and subsidiary for 2014 as a result of this transaction.
Hauswirth Corporation sold (or exchanged) a warehouse in year O. Hauswirth bought the warehouse several years ago for $103,500, and it has claimed $41,600 of depreciation expense against the building. Note: Loss amounts should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable. Round your final answers to the nearest whole dollar amount. Required: a. Assuming that Hauswirth receives $76,200 in cash for the warehouse, compute the amount and character of Hauswirth's recognized gain or loss on the sale. b. Assuming that Hauswirth exchanges the warehouse in a like-kind exchange for some land with a fair market value of $76,200, compute Hauswirth's realized gain or loss, recognized gain or loss, deferred gain or loss, and basis in the new land. c. Assuming that Hauswirth receives $21,000 in cash in year 0 and a $87,000 note receivable that is payable in year 1, compute the amount and character of Hauswirth's gain or loss in year O and in year 1. Complete this…
On January 1, Year 1, Lowing Company acquired a patent from Generics Research Corporation for $3 million. The legal life of the patent is 20 years, but Lowing expects to use it for 5 years. Pawson Company has committed to purchase the patent from Lowing for $500,000 at the end of that 5-year period. Lowing uses the straight-line method to amortize intangible assets with finite useful lives. What is the amount of amortization expense each year?
Lou Lou and Company purchased a piece of machinery 2 years ago for $50,000 and has depreciation to date of $15,000. The fair market value of the asset is $30,000, but the company believes it can achieve $34,000 in net future cash flows from the asset. Costs to dispose of the asset is $200. Assuming the asset is held for use, determine if the asset is impaired. If so, what is the amount of the write-off? The asset is impaired and Lou Lou should record a $1,000 loss on impairment. The asset is impaired and Lou Lou should record a $5,200 loss on impairment. The asset is NOT impaired. The asset is impaired and Lou Lou should record a $5,000 loss on impairment.
Podey Company has a machine that originally cost $20,000, has accumulated depreciation of $14,000 at the beginning of the current year, and is being depreciated at $2,000 per year with the straight-line method. If the company sells the machine for $2,400 on September 30, it will recognize a loss on disposal of $2,100. gain on disposal of $2,400. loss on disposal of $3,600. gain on disposal of $3,600.
On December 31, Strike Company has decided to sell one of its batting cages. The initial cost of the equipment was $260,520.00 with an accumulated depreciation of $247,494.00. Depreciation has been taken up to the end of the year. The company found a company that is willing to buy the equipment for $29,959.80. What is the amount of the gain or loss on this transaction? Select the correct answer. Gain of $29,959.80 Gain of $16,933.80 Loss of $16,933.80 Cannot be determined
Smith 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 $1,190,000
Hauswirth Corporation sold (or exchanged) a warehouse in year 0. Hauswirth bought the warehouse several years ago for $65,000, and it has claimed $23,000 of depreciation expense against the building. (Loss amounts should be indicated by a minus sign. Leav no answer blank. Enter zero if applicable. Round your final answers to the nearest whole dollar amount.) Required: a. Assuming that Hauswirth receives $50,000 in cash for the warehouse, compute the amount and character of Hauswirth's recognized gain or loss on the sale. b. Assuming that Hauswirth exchanges the warehouse in a like-kind exchange for some land with a fair market value of $50,000, compute Hauswirth's realized gain or loss, recognized gain or loss, deferred gain or loss, and basis in the new land. c. Assuming that Hauswirth receives $20,000 in cash in year O and a $50,000 note receivable that is payable in year 1, compute th amount and character of Hauswirth's gain or loss in year O and in year 1. Complete this question by…