On january 1, 2022, Sarah Company purchased a machine for 8,500,000 and received a government grant of 1,000,000 toward the asset cost. The accounting policy is to treat the grant as a reduction in the cost of the asset. The machine is to be depreciated on a straight line basis over 5 years with a residual value of 500,000. On january 1, 2024, the grant became fully repayable because of noncompliance with conditions. 1. What amount should be reported as depreciation for 2022? a. 1,700,000 b. 1,600,000 c. 1,500,000 d. 1,400,000 2. What amount should be reported as depreciation for 2024? a. 1,400,000 b. 1,800,000 c. 1,600,000 d. 2,000,000

Pinky and the Brain Ltd acquired an item of plan at a gross cost of $680,000 on October 20X2. The plant has an estimated life of 10 years with residual value equal to 15% of its gross cost. The company uses straight line depreciation charge on a time-apportioned basis. The company received a government grant of 30% of its cost price at the time of its purchase. The terms of the grant are that if the company retains the asset for four years or more, then no repayment liability will be incurred. If the plant is sold within four years a repayment on a sliding scale would be applicable. The repayment is 75% if sold within the first year of purchase and this amount decreases by 25% per annum. Pinky and the Brain Ltd has no intention to sell the plant within the first four years. The company's accounting policy for capital based government grants is to treat them as deferred credits and release them to income over the life of the asset to which they relate. Required: a. Discuss whether the…

Aukey Smith contributed $1,000,000 to the local homeless shelter on November 1, 2025, stipulating that the contribution be used to purchase a building to provide additional beds for the homeless. The building was purchased at à cost of $1,200,000 on March 31, 2026, with $200,000 coming from surpluses in the general fund. The building has an estimated useful life of 15 years, with no residual value. The shelter capitalizes its capital assets and uses the straight line method to amortize its capital assets, pro-rating for the number of months owned in the years of acquisition and disposal. The shelter has a December 31 year end and uses the deferral method. What journal entry correctly accounts for the building and contribution revenue in the financial statements for the year ending December 31, 2026? 50,000 O Dr. Deferred contribution liability Cr. Contribution revenue Dr. Amortization expense Cr. Capital asset-accumulated amortization Dr. Deferred revenue Dr. Amortization expense Cr.…

Information concerning Blue Corporation's intangible assets is as follows. On January 1, 2025, Blue signed an agreement to operate as a franchisee of Hsian Copy Service, Inc. for an initial franchise fee of $100,000. Of this amount, $20,000 was paid when the agreement was signed, and the balance is payable in 4 annual payments of $20,000 each, beginning January 1, 2026. The agreement provides that the down payment is not refundable and no future services are required f the franchisor. The present value at January 1, 2025, of the 4 annual payments discounted at 15% (the implicit rate for a loan of this type) is $57,100. The agreement also provides that 5% of the revenue from the franchise must be paid to the franchisor annually. Blue's revenue from the franchise for 2025 was $870,000. Blue estimates the useful life of the franchise to be 10 years. (Hint: You may want to refer to Chapter 18 to determine the proper accounting treatment for the franchise fee and payments.) Blue incurred…

Pearl Limited purchased an asset at a cost of $20,000 on March 1, 2023. The asset has a useful life of seven years and an estimated residual value of $2,200. For tax purposes, the asset belongs in CCA Class 8, with a rate of 20%. (a) Calculate the CCA for each year, 2023 to 2026, assuming Pearl's asset is eligible for the Accelerated Investment Incentive, and that this is the only asset in Class 8. 2023 2024 2025 2026 2024 2025 CCA 2026 $ TA (b) How would the calculation for each year from 2024 to 2026 change if the asset had been purchased in 2024? $ $ $ tA tA $ CCA

In 2024, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2026. Information related to the contract is as follows: Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year Assume that Westgate Construction's contract with Santa Clara County does not qualify for revenue recognition over time. Required: 1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years. 2-a. In the journal below, complete the necessary journal entries for the year 2024 (credit "Cash, Materials, etc." for construction costs incurred). 2024 $ 2,739,000 5,561,000 2,300,000 2,100,000 Cost incurred during the year Estimated costs to complete as of year-end 2025 $ 3,735,000 1,826,000 4,174,000 3,900,000 2024 $ 2,430,000 5,630,000 2-b. In the journal below, complete the necessary journal entries for the year…

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